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Are Investors Undervaluing ABM Industries (ABM) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

ABM Industries (ABM) is a stock many investors are watching right now. ABM is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 15.56. This compares to its industry's average Forward P/E of 45.63. ABM's Forward P/E has been as high as 22.74 and as low as 9.74, with a median of 18.17, all within the past year.

Finally, we should also recognize that ABM has a P/CF ratio of 28.79. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ABM's current P/CF looks attractive when compared to its industry's average P/CF of 41.80. Within the past 12 months, ABM's P/CF has been as high as 33.22 and as low as 5.55, with a median of 11.62.

These figures are just a handful of the metrics value investors tend to look at, but they help show that ABM Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ABM feels like a great value stock at the moment.


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Zacks Investment Research