Back to top

Analyst Blog

On Dec 2, 2013, we reaffirmed our Neutral recommendation on ABM Industries Inc  (ABM - Analyst Report) .The reiteration was based on the company’s strong third quarter fiscal 2013 results, realignment of its operational structure to improve its long-term growth prospects and higher margin opportunities. However, intense competitive pressure and integration costs from increased acquisitions are likely to undermine the positives to some extent.

Why the Neutral Recommendation?

ABM Industries has developed a platform to deliver an end-to-end service model to its clients by realigning its operational structure to an on-site, mobile and on-demand market based structure. This realignment is likely to improve its long-term growth prospects and provide higher margin opportunities by enabling it to better deliver end-to-end services to its clients across urban, suburban and rural areas.

The company further expects to extend its global footprint as well as strengthen its position in existing markets through both inorganic and organic growth across the industry verticals. The company’s strategy also entails a diligent focus to maintain steady profit margins, keeping overall costs low.

However, the company faces intense competition from local and national players. Furthermore, the company faces indirect competition from building owners or tenants, who perform one or more of these services internally in order to cut down costs, especially in the areas where external services are subject to sales tax.

Also, the company largely depends on inorganic growth and the failure to make new acquisitions on a regular basis may hamper its growth rate.

Nevertheless, over the last 60 days, the Zacks Consensus Estimate for ABM Industries’ 2013 earnings per share moved up by 0.7% to $1.48. Also, for 2014, it increased by 0.6% to $1.62 per share.

Other Stocks to Consider

ABM Industries currently has a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Stantec Inc (STN - Snapshot Report) and CoreLogic, Inc (CLGX - Snapshot Report), holding a Zacks Rank #1 (Strong Buy), and Rollins Inc (ROL - Snapshot Report), holding a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%