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Will ABM Industries (ABM) Surprise This Earnings Season?

MMM MCHP FCN ABM

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ABM Industries Incorporated (ABM - Analyst Report) is set to report fourth-quarter 2013 results on Dec 9. Last quarter it posted a 5.1% positive earnings surprise. Let us see how things are shaping up for this announcement.

In the last reported quarter, ABM Industries reported strong third quarter fiscal 2013 results (ended July 31, 2013) with net income of $16.1 million or 29 cents per share compared with $12.6 million or 23 cents per share in the year-earlier quarter.

Growth Factors this Past Quarter

ABM Industries has a healthy pipeline of future businesses and is particularly going strong in government business. The company expects to continue its bull run in the coming quarters as well as healthy margin improvements and seamless integration of acquired businesses. Management also reiterated that corporate restructuring initiatives were well on track to have a sustained long-term growth momentum.

The company 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.

Earnings Whispers?

Our proven model does not conclusively show that ABM Industries is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: The Most Accurate Estimate and the Zacks Consensus Estimate both currently stand at 45 cents. Thus, the ESP is 0.00%.

Zacks Rank #2 (Buy): ABM Industries carries a Zacks Rank #2 but a positive ESP would have made us confident about an earnings beat.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in the imminent future:

FTI Consulting, Inc. (FCN - Analyst Report) with Earnings ESP of + 1.74% and a Zacks Rank #1 (Strong Buy)

3M company. (MMM - Analyst Report) with Earnings ESP of +0.60% and a Zacks Rank #3 (Hold)

Microchip Technology Inc. (MCHP - Analyst Report) with Earnings ESP of +0.46% and a Zacks Rank #2 (Buy).

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