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A month has gone by since the last earnings report for ABM Industries (ABM). Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ABM Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
ABM Industries Q4 Earnings Lag Estimates, Revenues Top
ABM Industries reported mixed fourth-quarter fiscal 2020 results, wherein earnings missed the Zacks Consensus Estimate while revenues outpaced the same.
Adjusted earnings from continuing operations came in at 69 cents per share, which missed the consensus mark by 4.2% but improved 4.5% year over year. The bottom line benefited from higher margin improvement in Work Orders and persistent management of direct labor to align with the operating environment. The company continued its operational investments in its EnhancedClean program and re-engaged corporate projects within certain areas like information technology (which were previously paused due to the pandemic).
Total revenues of $1.48 billion beat the consensus estimate by 2.7% but declined 9.9% from the year-ago quarter. The year-over-year decline was due to coronavirus-related client disruptions, such as facility closures and service-scope changes within the company's Aviation and Technical Solutions segments. These were, however, partially offset by huge demand for COVID-related work orders in the Business & Industry, and Technology & Manufacturing segments.
Business & Industry revenues decreased 1.6% year over year to $794.3 million. Aviation revenues decreased 43.9% year over year to $141 million. Education revenues of $212.2 million decreased 0.7% from the prior-year quarter. Technical Solutions revenues decreased 29.8% year over year to $123.1 million.
Technology & Manufacturing revenues improved 6.7% year over year to $245.2 million.
Adjusted EBITDA came in at $92.5 million compared with $93 million in the prior-year quarter. However, adjusted EBITDA margin rose to 6.2% from 5.6% in the year-ago quarter.
Adjusted income from continuing operations was $46.7 million, up 4.5% year over year. Operating expenses decreased 14.5% from the year-ago quarter to $1.24 billion. Selling, general and administrative expenses increased 38.4% from the year-ago quarter to $155.1 million.
Balance Sheet & Cash Flow
ABM Industries exited fourth-quarter fiscal 2020 with cash and cash equivalents of $394.2 million compared with $229.4 million at the end of the prior quarter. Long-term debt was $603 million compared with $664.2 million at the end of the prior quarter.
Net cash generated from operating activities totaled $198.7 million in the reported quarter. Free-cash flow came in at $189.6 million.
ABM Industries paid out a quarterly cash dividend of 18.5 cents per share, leading to $12.3 million of total dividend payout in the reported quarter. Additionally, the company’s board of directors announced a dividend hike of 2.7%, thereby raising the quarterly cash dividend to 19 cents. The raised dividend will be paid 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.
First-Quarter Fiscal 2021 Guidance
For the first quarter of fiscal 2021, ABM Industries expects adjusted income from continuing operations in the range of 60 to 65 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 14.47% due to these changes.
Currently, ABM Industries has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ABM Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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