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Here's Why Hold Strategy is Apt for ABM Industries Stock Now

Zacks Equity Research

Shares of ABM Industries Incorporated ABM have gained 18.5% year to date, outperforming the 9.3% rally of the industry it belongs to.

With expected earnings growth rate of 7.4% in fiscal 2019 and 10.3% in fiscal 2020, ABM seems to be a stock that investors should retain in their portfolio.

Factors Favoring the Company

ABM is currently executing 2020 Vision, a comprehensive transformation initiative. It includes upgradation of human resources information, labor management and enterprise resource planning systems, utilizing technology to enhance account planning, labor management, payroll and procurement and centralization of back-office functions. All these translate to substantial investments but will fetch significant operational improvement and long-term profits on the back of an industry-based go-to-market approach.

ABM Industries Incorporated Net Income (TTM)


ABM Industries Incorporated Net Income (TTM)

ABM Industries Incorporated net-income-ttm | ABM Industries Incorporated Quote

ABM Industries' strategy entails growth through acquisitions while maintaining desirable profit margins. The acquisition of GCA Services Group has strengthened the company’s long-term financial and operational capacities, primarily in the Technology & Manufacturing, Business & Industry and Education segments. Revenues related to GCA acquisition were more than $1 billion in fiscal 2018.

Zacks Rank and Stocks to Consider

Currently, ABM has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some top-ranked stocks in the broader Zacks Business Services sector include ICF International ICFI, Booz Allen Hamilton BAH and Charles River Associates CRAI, each carrying a Zacks Rank #2 (Buy).

The long-term expected EPS (three to five years) growth rate for ICF, Booz Allen and Charles River is 10%, 13% and 13%, respectively.

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