Why Should You Hold ABM Industries (ABM) in Your Portfolio?
ABM Industries Incorporated ABM is benefiting from its efforts to optimize revenue management, increase client retention and improve labor management through process and technology.
The company carries an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
The company’s shares have gained 5.8% over the past year, against the 1.5% decline of the industry it belongs to.
Factors That Bode Well
As part of 2020 Vision, ABM’s comprehensive transformation initiative, it has centralized key functional areas, strengthened sales capabilities and started investments in service delivery tools and processes to improve standard operating practices. These initiatives are contributing significantly to top- and bottom-line growth.
In 2015, when ABM began this initiative, revenues were $4.9 billion, adjusted EBITDA margin was 3.8%, and adjusted EPS was $1.62 per share. In the last four years, revenues, margins and earnings were up by around 30%, 40% and 30%, respectively. ABM continues to focus on optimizing revenue management, increasing client retention and improving labor management through process and technology.
Some Risks
ABM’s balance sheet is highly leveraged. At the end of fourth-quarter fiscal 2019, long-term debt was $744.2 million while cash and cash equivalents were $58.5 million. Such a cash position implies that ABM needs to generate adequate amount of operating cash flow to service its debt. Also, high debt may limit the company’s future expansion and worsen risk profile.
Zacks Rank & Stocks to Consider
Currently, ABM carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are S&P Global SPGI, NV5 Global, Inc. NVEE and Accenture PLC ACN. Each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings (three to five years) growth rate for S&P Global, NV5 Global and Accenture is estimated at 10%, 20% and 10.3%, respectively.
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ABM Industries Incorporated (ABM) : Free Stock Analysis Report
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