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Here's Why You Should Add ABM Industries to Your Portfolio

Zacks Equity Research

ABM Industries Incorporated ABM is a building-maintenance services company that has performed extremely well in the past three months and has the potential to carry the momentum forward. Therefore, if you have not taken advantage of the share-price appreciation yet, it’s time you add the stock to your portfolio.

Let’s take a look at the factors that make the stock an attractive pick.

Share Price Performance: A glimpse at the company’s price trend reveals that the stock has performed on par with the S&P 500 composite over the past three months. ABM has rallied 14.1% in the said time frame.

Solid Rank & VGM Score: ABM has a Zacks Rank #1 (Strong Buy) and a Value Growth Momentum Score (VGM Score) of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or #2 (Buy) offer the best investment opportunities for investors. Thus, the company is a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here

Northward Estimate Revisions: Three estimates for fiscal 2020 moved north over the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2020 climbed 24.7%.

Positive Earnings Surprise History: ABM has an impressive earnings surprise history. The company outpaced the consensus mark in each of the trailing four quarters, delivering an average beat of 39.5%.

Growth Factors: ABM is currently executing 2020 Vision, a comprehensive transformation initiative, aimed at achieving operational improvement and vertical realignment. As part of this plan, the company is upgrading its human-resources information, labor management and enterprise-resource planning systems. It is utilizing technology to enhance account planning, labor management, payroll and procurement. ABM is centralizing many of its back-office functions via Enterprise Services Center in Sugar Land.

The company has been able to leverage its scale, increase purchasing power and identify preferred suppliers through consolidating purchasing activities, thereby saving cost in supplies and materials procurement. Post complete execution, the 2020 Vision will boost long-term profits on the back of an industry-based go-to-market approach.

The buyout of GCA Services Group has strengthened ABM’s long-term financial and operational capacities, primarily in the Technology & Manufacturing, Business & Industry and Education segments. GCA is now fully embedded in ABM’s organic base.

Other Stocks to Consider

Some other top-ranked stocks in the broader Zacks Business Services sector are IQVIA Holdings IQV, Pluralsight PS and FleetCor Technologies FLT, each carrying a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for FleetCor, IQVIA and Pluralsight (PS) are 9.9%, 12.1 and 12.3%, respectively.

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ABM Industries Incorporated (ABM) : Free Stock Analysis Report
 
FleetCor Technologies, Inc. (FLT) : Free Stock Analysis Report
 
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
 
Pluralsight, Inc. (PS) : Free Stock Analysis Report
 
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