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Here's Why You Should Bet on ABM Industries (ABM) Stock Now
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Headquartered in San Francisco, CA, ABM Industries Incorporated (ABM - Free Report) provides engineering, janitorial, parking, and facility solutions to commercial, industrial, institutional, and retail facilities. The stock appears to be a prudent long-term investment proposition backed by its solid Zacks Rank #2 (Buy) and inherent growth potential.
Growth Drivers
ABM Industries 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 has improved its long-term growth prospects and offered higher margin opportunities by enabling it to deliver better services to its clients across urban, suburban and rural areas. The company further expects to extend its global footprint and strengthen its position in existing markets through both inorganic and organic growth across the industry verticals.
The company has embarked on a Vision 2020 plan that outlines its vision for the next five years. The plan hinges on three primary phases, the first of which is aimed to increase the efficiency of the company through diligent execution of the operating plan and stringent cost-reduction activities. The second phase will focus on driving growth across the realigned verticals through effective realization of the cost savings from procurement, account management and other organizational changes. The final phase of the transformation will include accelerated growth impetus from the vertical alignment and account planning systems with a continuous focus on additional cost savings. ABM Industries is currently focusing on the second phase of the plan and remains confident of achieving $40–$50 million in savings through operational efficiencies by the end of 2017.
ABM Industries outperformed the Building Products – Maintenance Services industry in the last one-year period with an average return of 31.1% compared with 19.9% gain for the latter. The company has a healthy pipeline of future businesses with strength seen particularly in its government business. The company’s comprehensive, strategic and transformative initiatives are focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. Management also reiterated that corporate restructuring initiatives are well on track to yield sustained long-term growth. Further, ABM Industries offered bullish fiscal 2017 guidance. For the fiscal year, it expects adjusted income from continuing operations in the range of $1.80–$1.90 per share. The increased guidance is primarily due to the recognition of higher-than-expected 2020 Vision savings.
The stock has long-term earnings growth expectations of 8%. Earnings estimates for the company for the current quarter increased from 41 cents to 44 cents in the last couple of months while that for the current year rose from $1.85 to $1.89, signifying inherent strengths.
CBIZ is currently trading at a forward P/E of 17.35x. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 21.45%.
CRA International has a long-term earnings growth expectation of 8%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 16.02%.
Exponent has a long-term earnings growth expectation of 12%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.35%.
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Here's Why You Should Bet on ABM Industries (ABM) Stock Now
Headquartered in San Francisco, CA, ABM Industries Incorporated (ABM - Free Report) provides engineering, janitorial, parking, and facility solutions to commercial, industrial, institutional, and retail facilities. The stock appears to be a prudent long-term investment proposition backed by its solid Zacks Rank #2 (Buy) and inherent growth potential.
Growth Drivers
ABM Industries 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 has improved its long-term growth prospects and offered higher margin opportunities by enabling it to deliver better services to its clients across urban, suburban and rural areas. The company further expects to extend its global footprint and strengthen its position in existing markets through both inorganic and organic growth across the industry verticals.
The company has embarked on a Vision 2020 plan that outlines its vision for the next five years. The plan hinges on three primary phases, the first of which is aimed to increase the efficiency of the company through diligent execution of the operating plan and stringent cost-reduction activities. The second phase will focus on driving growth across the realigned verticals through effective realization of the cost savings from procurement, account management and other organizational changes. The final phase of the transformation will include accelerated growth impetus from the vertical alignment and account planning systems with a continuous focus on additional cost savings. ABM Industries is currently focusing on the second phase of the plan and remains confident of achieving $40–$50 million in savings through operational efficiencies by the end of 2017.
ABM Industries outperformed the Building Products – Maintenance Services industry in the last one-year period with an average return of 31.1% compared with 19.9% gain for the latter. The company has a healthy pipeline of future businesses with strength seen particularly in its government business. The company’s comprehensive, strategic and transformative initiatives are focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. Management also reiterated that corporate restructuring initiatives are well on track to yield sustained long-term growth. Further, ABM Industries offered bullish fiscal 2017 guidance. For the fiscal year, it expects adjusted income from continuing operations in the range of $1.80–$1.90 per share. The increased guidance is primarily due to the recognition of higher-than-expected 2020 Vision savings.
The stock has long-term earnings growth expectations of 8%. Earnings estimates for the company for the current quarter increased from 41 cents to 44 cents in the last couple of months while that for the current year rose from $1.85 to $1.89, signifying inherent strengths.
Other Stocks to Consider
Some other top stocks in the industry include CBIZ, Inc. (CBZ - Free Report) , CRA International Inc. (CRAI - Free Report) and Exponent Inc. (EXPO - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CBIZ is currently trading at a forward P/E of 17.35x. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 21.45%.
CRA International has a long-term earnings growth expectation of 8%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 16.02%.
Exponent has a long-term earnings growth expectation of 12%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.35%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>