ABM Industries (ABM) Stock Rises 89% in a Year: Here's Why
Shares of ABM Industries Incorporated ABM have gained 89% over the past year, much ahead of 39.6% growth of the industry it belongs to.
Let’s delve into factors that have contributed to the company’s outperformance.
Consecutive Earnings Beat
ABM Industries came up with better-than-expected earnings performance in six of the past seven quarters. The company’s bottom line continued to benefit from higher margin improvement in Work Orders and persistent management of direct labor to align with the operating environment. Continuous operational investments in the company’s EnhancedClean program and re-engaged corporate projects within certain areas like information technology (which were previously paused due to the pandemic) have also been aiding the bottom line.
Shareholder-Friendly Moves
ABM Industries’ board of directors announced a dividend hike of 2.7%, thereby raising the quarterly cash dividend to 19 cents. The raised dividend was paid out on Feb 1, 2021, to its shareholders of record as of Jan 7, 2021. This marked the 219th consecutive quarterly cash dividend declared by the company.
The company paid out dividends of $49.3 million in fiscal 2020 and $47.7 million in fiscal 2019. Additionally, the company returned $5.1 million through share buybacks in fiscal 2020. Such shareholder-friendly moves indicate the company’s commitment to create value for shareholders and also underline its confidence in its business. These initiatives not only instill investors’ confidence but also positively impact the company's earnings per share.
Strategic Acquisitions Bode Well
ABM Industries' strategy entails growth through strategic acquisitions while maintaining desirable profit margins. The acquisition of GCA Services Group has expanded the company’s long-term operational and financial position. The GCA integration has been completed and is making meaningful contributions to ABM Industries' overall operational results, predominantly within Technology & Manufacturing, Business & Industry, and Education segments.
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 CoreLogic CLGX, Gartner IT and NV5 Global NVEE, each carrying a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for CoreLogic, Gartner and NV5 Global is 10%, 13.5% and 16.8%, respectively.
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