We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Strength in the construction business, along with healthy manufacturing and service activities, is enabling the Zacks Building Products - Maintenance Services industry to support the improving demand environment.
Service essentiality, technology and capital-management measures are aiding ABM Industries Inc. and Rollins, Inc. to sail through the pandemic-induced testing times.
About the Industry
Companies under the Zacks Building Products - Maintenance Services category provide a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning, plumbing, landscaping and pest control. The industry is steadily recovering from the pandemic-induced weakness, with demand for services shooting up in residential, commercial and public buildings, and in various industries across the globe.
To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand and targeting end markets. As these services are essential and cannot be delayed or canceled, demand for the same is expected to accelerate drastically post the pandemic, helping industry players recover quickly.
What's Shaping the Future of the Building Maintenance Industry?
Sustained Demand Expansion: Revenues and income have been increasing for the past several years, mainly because the companies offer services that consumers generally cannot delay. This has enabled most industry players to increase dividends.
Manufacturing and Service in the Pink: With economic activities in manufacturing as well as non-manufacturing sectors staying in the pink, demand for building maintenance services is anticipated to rise steadily. Both the manufacturing PMI and the Services PMI, measured by the Institute for Supply Management, have stayed above the 50% mark for the past 23 consecutive months, indicating continued expansion.
Increasing Construction Spending: The construction business, on which the industry is largely dependent, has strengthened sequentially and year over year. Per the latest release by the U.S. Census Bureau, construction spending during March 2022 was estimated at a seasonally-adjusted annual rate of $1,730.5 billion, up 0.1% from the revised February 2022 estimate and 11.7% from the March 2021 estimate. During the first three months of 2022, construction spending rose 12% from the same period in 2021.
Zacks Industry Rank Indicates Bleak Prospects
The Building Products - Maintenance Service industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #215. This rank places it in the bottom 15% of more than 250 Zacks industries.
The group's Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Building Products - Maintenance Service industry has depreciated 10.4% compared with the S&P 500 composite's decline of 3.6%. The broader sector has declined 35.9% during the same period.
Industry's Current Valuation
Comparing the industry with the S&P 500 composite on the basis of forward 12-month price-to-earnings (P/E), which is a commonly-used multiple for the industry, we see that the industry trades at 29.29X, higher than the S&P 500's 17.38X and the sector's 23.64X.
Over the past five years, the industry has traded as high as 72.32X, as low as 25.11X and at a median of 37.44X.
ABM Industries: This integrated facility solutions provider's multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiency, developing its own talent management system capabilities, expanding data usage and modernizing the digital ecosystem. ELEVATE is expected to significantly accelerate the company's organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
The September 2021 acquisition of Able Services has strengthened ABM's engineering and technical services, and expanded its sustainability and energy efficiency offerings. The buyout adds $1.1 billion in engineering and janitorial services revenues and is anticipated to achieve around $30 million to $40 million in cost synergies for the company.
The Zacks Consensus Estimate for fiscal 2022 EPS has increased 0.6% over the past 60 days. The stock lost 16.3% in the past year.
Rollins: This leading pest and termite control services provider is benefiting from its balanced approach to organic and inorganic growth.
The company's revenues increased 10.3% year over year in the first quarter of 2022, with all of its business lines – residential, commercial and termite – registering growth.
The Zacks Consensus Estimate for 2022 EPS has been unchanged at 73 cents over the past 60 days. The stock lost 5.7% in the past year.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Zacks Industry Outlook Highlights ABM Industries and Rollins
For Immediate Release
Chicago, IL – May 17, 2022 – Today, Zacks Equity Research discusses ABM Industries Inc. (ABM - Free Report) and Rollins, Inc. (ROL - Free Report) .
Industry: Building Maintenance
Link: https://www.zacks.com/commentary/1924808/2-stocks-to-watch-from-the-building-maintenance-industry
Strength in the construction business, along with healthy manufacturing and service activities, is enabling the Zacks Building Products - Maintenance Services industry to support the improving demand environment.
Service essentiality, technology and capital-management measures are aiding ABM Industries Inc. and Rollins, Inc. to sail through the pandemic-induced testing times.
About the Industry
Companies under the Zacks Building Products - Maintenance Services category provide a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning, plumbing, landscaping and pest control. The industry is steadily recovering from the pandemic-induced weakness, with demand for services shooting up in residential, commercial and public buildings, and in various industries across the globe.
To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand and targeting end markets. As these services are essential and cannot be delayed or canceled, demand for the same is expected to accelerate drastically post the pandemic, helping industry players recover quickly.
What's Shaping the Future of the Building Maintenance Industry?
Sustained Demand Expansion: Revenues and income have been increasing for the past several years, mainly because the companies offer services that consumers generally cannot delay. This has enabled most industry players to increase dividends.
Manufacturing and Service in the Pink: With economic activities in manufacturing as well as non-manufacturing sectors staying in the pink, demand for building maintenance services is anticipated to rise steadily. Both the manufacturing PMI and the Services PMI, measured by the Institute for Supply Management, have stayed above the 50% mark for the past 23 consecutive months, indicating continued expansion.
Increasing Construction Spending: The construction business, on which the industry is largely dependent, has strengthened sequentially and year over year. Per the latest release by the U.S. Census Bureau, construction spending during March 2022 was estimated at a seasonally-adjusted annual rate of $1,730.5 billion, up 0.1% from the revised February 2022 estimate and 11.7% from the March 2021 estimate. During the first three months of 2022, construction spending rose 12% from the same period in 2021.
Zacks Industry Rank Indicates Bleak Prospects
The Building Products - Maintenance Service industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #215. This rank places it in the bottom 15% of more than 250 Zacks industries.
The group's Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Building Products - Maintenance Service industry has depreciated 10.4% compared with the S&P 500 composite's decline of 3.6%. The broader sector has declined 35.9% during the same period.
Industry's Current Valuation
Comparing the industry with the S&P 500 composite on the basis of forward 12-month price-to-earnings (P/E), which is a commonly-used multiple for the industry, we see that the industry trades at 29.29X, higher than the S&P 500's 17.38X and the sector's 23.64X.
Over the past five years, the industry has traded as high as 72.32X, as low as 25.11X and at a median of 37.44X.
Two Stocks to Watch Right Now
We present two stocks that are both currently carrying a Zacks Rank #3 (Hold) and are well-positioned for near-term growth. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
ABM Industries: This integrated facility solutions provider's multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiency, developing its own talent management system capabilities, expanding data usage and modernizing the digital ecosystem. ELEVATE is expected to significantly accelerate the company's organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
The September 2021 acquisition of Able Services has strengthened ABM's engineering and technical services, and expanded its sustainability and energy efficiency offerings. The buyout adds $1.1 billion in engineering and janitorial services revenues and is anticipated to achieve around $30 million to $40 million in cost synergies for the company.
The Zacks Consensus Estimate for fiscal 2022 EPS has increased 0.6% over the past 60 days. The stock lost 16.3% in the past year.
Rollins: This leading pest and termite control services provider is benefiting from its balanced approach to organic and inorganic growth.
The company's revenues increased 10.3% year over year in the first quarter of 2022, with all of its business lines – residential, commercial and termite – registering growth.
The Zacks Consensus Estimate for 2022 EPS has been unchanged at 73 cents over the past 60 days. The stock lost 5.7% in the past year.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.