ABM Industries (ABM) Gains From ELEVATE Amid Economic Risks
ABM Industries Incorporated ABM is benefiting from the long-term transformative and strategic plans, acquisition and liquidity amid economic and labor risks.
ABM reported impressive first-quarter fiscal 2024 results, wherein earnings per share (EPS) and revenues beat the Zacks Consensus Estimate. ABM’s EPS (excluding 16 cents from non-recurring items) was 86 cents per share, which surpassed the Zacks Consensus Estimate by 19.4% and increased 8.9% from the prior-year quarter. Total revenues of $2.1 billion beat the consensus mark by 2.9% and improved 3.9% from first-quarter fiscal 2023.
The stock has gained 4.1%, underperforming the 21.5% rally of the industry it belongs to and the 15.3% rise of the Zacks S&P 500 composite in the past six months.
How is ABM Industries Doing?
ABM Industries is leveraging its multi-year comprehensive strategic plan, ELEVATE, which focuses on providing clients with services that improve transparency and efficiencies, develop capabilities to own talent management systems, expand data usage and boost the digital ecosystem. This strategy is expected to provide an impetus to the company's organic growth, improve its strategic and comprehensive positioning, and increase profits.
RavenVolt, which is part of ABM’s ELEVATE strategy, is assisting the company to expand its Technical Solutions service, and strengthen EV infrastructure and the bundled energy solutions market. ABM’s eMobility business will receive a boost from RavenVolt, as it will provide bespoke solutions in facilities that demand additional power generation capacity to support EV charging.
ABM started a comprehensive transformational initiative called 2020 Vision. This was to attain long-term profitable growth through an industry-based go-to-market approach. As part of this initiative, the company has centralized key functional areas, reinforced sales capabilities, and begun investing in service delivery tools and processes to support standard operating practices for its long-term success. These, in turn, have improved ABM’s Janitorial, Parking, Facilities Services, Building & Energy Solutions, and Airline Services, and positioned it as a leading integrated facilities management company.
ABM Industries' current ratio at the end of the first quarter was pegged at 1.48, higher than 1.41 at the end of the prior quarter and 1.3 at the end of the year-ago quarter. A current ratio of more than 1 often indicates that the company will easily pay off its short-term obligations. An increasing current ratio bodes well.
ABM Industries Incorporated Revenue (TTM)
ABM Industries Incorporated revenue-ttm | ABM Industries Incorporated Quote
ABM could be hurt as the global, national or local economy slows down. This will affect client demand for its services, leading to decreased client orders and ability to pay for services. The company has confronted labor scarcities, escalating wage inflation and heightened competition.
These situations might result in cost hikes, including a rise in overtime expenses, and increased dependence on temporary personnel to meet customer needs. Furthermore, the recruitment and retention of employees may necessitate offering higher wage rates.
Zacks Rank and Stocks to Consider
ABM Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign DOCU andThe Hackett Group HCKT.
DocuSign (DOCU) currently carries a Zacks Rank of 2 (Buy). DOCU has a long-term earnings growth expectation of 13.3%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DOCU delivered a trailing four-quarter earnings surprise of 23.7%, on average.
The Hackett Group(HCKT)also carries a Zacks Rank of 2 at present. HCKT has a long-term earnings growth expectation of 13.5%.
HCKT delivered a trailing four-quarter earnings surprise of 2.6%, on average.
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