Blink vs. ABB: Which Electric Vehicle Charging Stock is a Better Buy?

Blink Charging Co. (BLNK) and ABB Ltd (ABB) are two of the world's leading providers of charging services for electric vehicles (EVs). An owner, operator, and provider of EV charging equipment and networked EV charging services, BLNK offers residential and commercial EV charging equipment. ABB operates through four divisions — Electrification Products, Robotics and Motion, Industrial Automation and Power Grids.

Global EV sales are expected to rise to 26 million by 2030 from roughly 1.7 million in 2020. As a result of this accelerating adoption of EVs, both BLNK and ABB are expected to gain as more drivers seek fast, convenient, and reliable charging options.

But, while BLNK has returned 681.8% over the past five years, ABB has gained 53.4%. In terms of year-to-date performance, BLNK is a clear winner with 2421.5% returns versus ABB’s 15.7%. But which of these two stocks is a better pick now? Let's have a look .

Latest Movements

On December 22, BLNK announced that it had signed an exclusive seven-year agreement with Lehigh Valley Health Network (LVHN). Per the agreement, BLNK will own and operate the charging stations and will be able to deploy EV chargers across LVHN’s hundreds of health care facilities. The company announced on December 16 the installation of an additional 10 IQ 200 EV chargers at St. Luke’s University Health Network’s Orwigsburg, Quakertown, and Easton, PA hospital campuses.

The company announced on December 15 that it had signed an exclusive five-year contract with two five-year renewal options for the deployment of 20 company-owned IQ 200 units at four Blessing Health System locations in Quincy, Illinois. On December 10 BLNK announced the introduction of an innovative pole mounting kit for the company’s IQ 200 EV charging stations, which is expected to substantially increase the number of locations that can deploy EV chargers.

On December 3, BLNK announced an agreement with JSC Management Group, a large Burger King franchisee, to deploy numerous EV charging stations at key Burger King locations across the Northeast. Additional JSC locations are expected to be added to the company’s network in late 2020 or early 2021.

ABB installed its 1,000th high-power charger in Norway, earlier this month, which marks an important milestone in the country’s ambitious journey in  contributing to the achievement  of a zero-emission economy. The company entered season 7 of the ABB FIA Formula E World Championship as the title partner for the fourth season. ABB also launched a brand-new podcast, ABB Decoded, on December 4.

A two-year contract was awarded to ABB and Nüvü Camēras by NASA’s Jet Propulsion Laboratory in November. The Nancy Grace Roman Space Telescope’s CoronaGraph Imager (CGI),  which will have two high sensitivity cameras with electronic cores, will be developed by ABB along with Nüvü. ABB secured an order of roughly $150 million on November 17 to power next-generation cruise ships built by Italian shipbuilder Fincantieri, with Azipod electric propulsion, which has a proven ability to significantly reduce fuel consumption on board.

Recent Financial Results

BLNK’s revenue has surged 18.4% year-over-year to $0.9 million for the third quarter ended September 30, 2020, driven primarily  by significant increases in product sales.

With increased demand for the company’s commercial and residential products, its sales revenue has increased 74.4% year-over-year to $0.6 million. 668 EV charging stations were sold, deployed, or acquired across 25 states. And company owned chargers deployed during the quarter increased 87% year-over-year.

ABB’s revenue for the third quarter ended September 30, 2020 has increased 7% sequentially to $6.6 billion. Including power grid gains, its net income increased substantially to $4.5 billion. Orders increased slightly from the second quarter to $6.1 billion. In the Robotics & Discrete Automation (RA) segment, orders increased 12.9% sequentially to $720 million.

Expected Financial Performance

The market expects BLNK’s revenue to increase 89.4% in 2021. The company’s EPS is expected to grow 15.2% in 2021.

In comparison,  the market expects ABB’s revenue to increase 6.2% in 2021. The company’s EPS is expected to grow at a rate of 14.6% per annum over the next five years.

Profitability

ABB’s trailing-12-month revenue of $26.02 billion is much higher than BLNK’s. Moreover, ABB is more profitable with a gross margin of 30.7% versus BLNK’s 27.84%.

Also, ABB’s ROE and ROA of 3.42%, and 3.53%, respectively, compare favorably with BLNK’s negative values.

Thus, ABB is the more profitable stock here.

Valuation

In terms of forward P/E, ABB is currently trading at 29.96x, much more expensive than BLNK. However, ABB is less expensive both in terms of trailing-12-month P/S (2.30x versus BLNK’s 295.53x), and trailing-12-month EV/S (2.28x versus BLNK’s 335.21).

In terms of trailing-12-month price to book, BLNK’s 91.70x is significantly higher than ABB’s 3.50x.

POWR Ratings

While BLNK is rated “Buy” in our proprietary POWR Ratings system, ABB is rated “Strong Buy.” Here are how the four components of overall POWR Rating are graded for BLNK and ABB:

BLNK has an “A” for Trade Grade, and Peer Grade, and a “C” for Buy & Hold Grade, and Industry Rank. It is currently ranked #13 of 37 stocks in the Specialty Retailers industry.

ABB holds an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. It is currently ranked #4 of 62 stocks in the Industrial - Machinery industry.

The Winner

Both BLNK and ABB are good investment bets considering their market dominance and continued expansion. However, at a lower valuation, ABB appears to be a better buy based on its higher earnings growth potential, and higher profitability.

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ABB shares were trading at $28.00 per share on Tuesday morning, up $0.14 (+0.50%). Year-to-date, ABB has gained 19.62%, versus a 17.96% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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