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3 Top Stocks from the Prospering Building Maintenance Industry
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Strength in construction business, along with rise in manufacturing and service activities, is enabling the Zacks Building Products - Maintenance Services industry support the demand environment that is getting healthier.
Service essentiality, technology and capital-management measures are aiding Limbach Holdings, Inc. (LMB - Free Report) , Rollins, Inc. (ROL - Free Report) and ABM Industries Incorporated (ABM - Free Report) to sail through these testing times.
About the Industry
Companies grouped under the Zacks Building Products - Maintenance Services category provide a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning (HVAC), plumbing, landscaping, and pest control.
What’s Shaping the Future of Building Maintenance Industry?
Demand Expansion: Revenues, income and cash flows have been increasing for the past several years, mainly because the companies offer services that consumers generally cannot delay.
Manufacturing and Service in the Pink: With both manufacturing and service activities gathering steam, demand for building maintenance services is anticipated to rise steadily. Although manufacturing activities edged down 1.8% from October to November, with the Purchasing Managers Index (PMI) measured by Institute for Supply Management (ISM) touching 57.5%, the reading stayed well above 50 — highlighting growth in the manufacturing sector. This is the seventh consecutive month of expansion after April’s contraction that had interrupted an impressive growth rally of 131 consecutive months. Economic activity in the non-manufacturing sector contracted 0.7% from October to November as the Services PMI measured by ISM touched 55.9%. However, with the reading remaining above 50, the service sector is expanding as well. This is the sixth consecutive month of expansion after a two-month period of contraction that followed 122 straight months of expansion.
Reviving Construction Spending: The construction business, on which the industry is largely dependent upon, is gradually recovering from the pandemic-induced weakness. Per the latest release by the U.S. Census Bureau, construction spending during October was estimated at a seasonally adjusted annual rate of $1,438.5, up 1.3% from the revised September estimate. During the first 10 months of this year, construction spending increased 4.3 percent from the same period in 2019.
Zacks Industry Rank Indicates Bright Prospects
The Building Products - Maintenance Service industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #119. This rank places it in the top 47% 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 solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms 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’s take a look at the industry’s recent stock-market performance and current valuation.
Industry Outperforms the S&P 500 & Sector
Over the past year, the Zacks Building Products - Maintenance Service industry has outperformed the S&P 500 composite as well as the broader sector.
While the industry gained 61.5%, the S&P 500 composite has rallied 15.9%. The broader sector has declined 6.6%.
One-Year Price Performance
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 75.71X, higher than the S&P 500’s 22.67X and the sector’s 31.01X.
Over the past five years, the industry has traded as high as 75.71X, as low as 16.93X and at a median of 36.2X.
Forward 12-month Price-to-Earnings (P/E)
3 Building Maintenance Stocks to Keep a Close Eye On
Limbach Holdings, Inc.: The company is a commercial specialty contract services provider. It is currently focusing on risk management under an enhanced project selection framework, cash flow and liquidity maximization through improved working capital management, and rising exposure to the owner direct market.
While the sales pipeline is strong in most of its existing markets, Limbach pursues opportunities in new markets.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 15.3% over the past 60 days. Shares of the company have rallied a massive 326.8% in the past year.
Price and Consensus: LMB
Rollins, Inc.: This leading pest and termite control services provider is benefiting from its balanced approach to organic and inorganic growth. The company’s organic revenue growth rate is healthy, backed by solid technician and customer retention. Also, acquisitions are a major growth catalyst in Rollins’ business strategy.
The Zacks Consensus Estimate for ongoing-year EPS has remained unchanged at 52 cents in the past 60 days. The stock has appreciated 77.2% over the past year.
Price and Consensus: ROL
ABM Industries Incorporated: This integrated facility solutions provider is focused on upgrading its human-resources information, labor management and enterprise-resource planning systems. It is utilizing technology to enhance account planning, labor management, payroll and procurement.
ABM's strategy entails growth through acquisitions, while maintaining desirable profit margins. The acquisition of GCA Services Group has expanded the company’s long-term operational and financial position and is making significant contributions to overall operational results predominantly within the Technology & Manufacturing, Business & Industry and Education segments.
The Zacks Consensus Estimate for current-year EPS has unrevised at $2.46 for the past 60 days. The stock has rallied 9.2% in a year’s time.
Price and Consensus: ABM
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
3 Top Stocks from the Prospering Building Maintenance Industry
Strength in construction business, along with rise in manufacturing and service activities, is enabling the Zacks Building Products - Maintenance Services industry support the demand environment that is getting healthier.
Service essentiality, technology and capital-management measures are aiding Limbach Holdings, Inc. (LMB - Free Report) , Rollins, Inc. (ROL - Free Report) and ABM Industries Incorporated (ABM - Free Report) to sail through these testing times.
About the Industry
Companies grouped under the Zacks Building Products - Maintenance Services category provide a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning (HVAC), plumbing, landscaping, and pest control.
What’s Shaping the Future of Building Maintenance Industry?
Demand Expansion: Revenues, income and cash flows have been increasing for the past several years, mainly because the companies offer services that consumers generally cannot delay.
Manufacturing and Service in the Pink: With both manufacturing and service activities gathering steam, demand for building maintenance services is anticipated to rise steadily. Although manufacturing activities edged down 1.8% from October to November, with the Purchasing Managers Index (PMI) measured by Institute for Supply Management (ISM) touching 57.5%, the reading stayed well above 50 — highlighting growth in the manufacturing sector. This is the seventh consecutive month of expansion after April’s contraction that had interrupted an impressive growth rally of 131 consecutive months. Economic activity in the non-manufacturing sector contracted 0.7% from October to November as the Services PMI measured by ISM touched 55.9%. However, with the reading remaining above 50, the service sector is expanding as well. This is the sixth consecutive month of expansion after a two-month period of contraction that followed 122 straight months of expansion.
Reviving Construction Spending: The construction business, on which the industry is largely dependent upon, is gradually recovering from the pandemic-induced weakness. Per the latest release by the U.S. Census Bureau, construction spending during October was estimated at a seasonally adjusted annual rate of $1,438.5, up 1.3% from the revised September estimate. During the first 10 months of this year, construction spending increased 4.3 percent from the same period in 2019.
Zacks Industry Rank Indicates Bright Prospects
The Building Products - Maintenance Service industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #119. This rank places it in the top 47% 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 solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms 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’s take a look at the industry’s recent stock-market performance and current valuation.
Industry Outperforms the S&P 500 & Sector
Over the past year, the Zacks Building Products - Maintenance Service industry has outperformed the S&P 500 composite as well as the broader sector.
While the industry gained 61.5%, the S&P 500 composite has rallied 15.9%. The broader sector has declined 6.6%.
One-Year Price Performance
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 75.71X, higher than the S&P 500’s 22.67X and the sector’s 31.01X.
Over the past five years, the industry has traded as high as 75.71X, as low as 16.93X and at a median of 36.2X.
Forward 12-month Price-to-Earnings (P/E)
3 Building Maintenance Stocks to Keep a Close Eye On
We present three stocks that currently carry 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 stocks here.
Limbach Holdings, Inc.: The company is a commercial specialty contract services provider. It is currently focusing on risk management under an enhanced project selection framework, cash flow and liquidity maximization through improved working capital management, and rising exposure to the owner direct market.
While the sales pipeline is strong in most of its existing markets, Limbach pursues opportunities in new markets.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 15.3% over the past 60 days. Shares of the company have rallied a massive 326.8% in the past year.
Price and Consensus: LMB
Rollins, Inc.: This leading pest and termite control services provider is benefiting from its balanced approach to organic and inorganic growth. The company’s organic revenue growth rate is healthy, backed by solid technician and customer retention. Also, acquisitions are a major growth catalyst in Rollins’ business strategy.
The Zacks Consensus Estimate for ongoing-year EPS has remained unchanged at 52 cents in the past 60 days. The stock has appreciated 77.2% over the past year.
Price and Consensus: ROL
ABM Industries Incorporated: This integrated facility solutions provider is focused on upgrading its human-resources information, labor management and enterprise-resource planning systems. It is utilizing technology to enhance account planning, labor management, payroll and procurement.
ABM's strategy entails growth through acquisitions, while maintaining desirable profit margins. The acquisition of GCA Services Group has expanded the company’s long-term operational and financial position and is making significant contributions to overall operational results predominantly within the Technology & Manufacturing, Business & Industry and Education segments.
The Zacks Consensus Estimate for current-year EPS has unrevised at $2.46 for the past 60 days. The stock has rallied 9.2% in a year’s time.
Price and Consensus: ABM
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>