Last week saw the newest annual earnings release from ABM Industries Incorporated (NYSE:ABM), an important milestone in the company's journey to build a stronger business. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$6.0b in revenue. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, ABM Industries' four analysts currently expect revenues in 2021 to be US$5.87b, approximately in line with the last 12 months. Per-share earnings are expected to soar 82,787% to US$2.48. In the lead-up to this report, the analysts had been modelling revenues of US$5.91b and earnings per share (EPS) of US$2.31 in 2021. So the consensus seems to have become somewhat more optimistic on ABM Industries' earnings potential following these results.
The consensus price target was unchanged at US$49.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values ABM Industries at US$58.00 per share, while the most bearish prices it at US$45.00. This is a very narrow spread of estimates, implying either that ABM Industries is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.0%, a significant reduction from annual growth of 6.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ABM Industries is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ABM Industries' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that ABM Industries' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on ABM Industries. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for ABM Industries going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 5 warning signs we've spotted with ABM Industries .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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