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ABM Industries (ABM) to Report Q3 Earnings: What's in Store?

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ABM Industries Inc. (ABM - Free Report) is scheduled to report third-quarter fiscal 2018 results on Sep 6, after market close.

While the top line is likely to benefit from acquisitions and organic growth, the bottom line is expected to benefit from lower tax rates.

So far this year, shares of ABM Industries have declined 15.9%, underperforming the industry’s gain of 20%.

 

Let’s check out the expectations in detail.

Top Line to Increase Year Over Year

The Zacks Consensus Estimate for revenues for the to-be-reported quarter stands at $1.61 billion, indicating year-over-year growth of 22.2%. The top line is expected to be driven by contributions from acquisition of GCA Services Group, organic growth within the Business & Industry segment, and parking and transportation wins within the Aviation segment. Bookings are also expected to increase reflecting business expansion across its clients.

In second-quarter fiscal 2018, total revenues rose 20.6% from the year-ago quarter to $1.58 billion. Organic revenue growth was 4.5% and revenues related to GCA acquisition came in at $256.4 million. New bookings brought in nearly $460 million of annualized revenues for the first half of fiscal 2018.

Earnings Likely to Grow on Tax Reform Policy

The Tax Cuts and Jobs Act, which reduced corporate tax rates significantly from 35% to 21%, will benefit ABM Industries’ earnings in the to-be-reported quarter. Notably, the consensus estimate for earnings per share (EPS) is pegged at 54 cents, indicating year-over-year growth of 5.9%.

In the fiscal second quarter, adjusted earnings declined 4.1% from the year-ago quarter to 47 cents per share.

Our Model Doesn’t Suggest a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ABM Industries has an Earnings ESP of 0.00% and a Zacks Rank #4, a combination that makes surprise prediction difficult.

Key Picks

Here are a few stocks from the broader Business Services sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

FactSet (FDS - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank of 2. The company is scheduled to report fourth-quarter fiscal 2018 results on Sep 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture (ACN - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank #3. The company is expected to report fourth-quarter fiscal 2018 results on Sep 27.

Mastercard (MA - Free Report) has an Earnings ESP of +0.11% and a Zacks Rank #3. The company is expected to report third-quarter 2018 results on Oct 30.

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