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Building Maintenance Services Stocks' Near-Term Outlook Dreary
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The companies grouped under the Building Maintenance Services category are providers of a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning (HVAC), plumbing, landscaping and pest control.
Here are the industry’s three major themes:
Since the industry participants offer services that consumers generally cannot delay, revenues and cash flows remain fairly stable through the economic cycle.
Service demand is currently in good shape driven by economic stability, rising consumer and government spending, and decent construction activity. Strict EHS policies in North America and Europe should drive demand for building maintenance services. Rapid industrialization and urbanization will also keep boosting demand.
The U.S.-China trade war has been leading to higher material costs for building developers, thanks to the steel and aluminum tariffs.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Building Products - Maintenance Service industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #242. This rank places it in the bottom 4% of more than 250 Zacks industries.
The group’s Zacks 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 outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily lowering their estimates. Over the past year, the industry’s consensus earnings estimate for 2019 has moved down 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 Lags S&P 500 and Sector
The Zacks Building Products - Maintenance Service industry has underperformed the Zacks S&P 500 composite and the broader Zacks Business Services Sector over the past year.
The industry has seen an 8.1% decline over the said period against the S&P 500 composite and the broader sector’s rise of 18.5% and 21.2%, respectively.
One-Year Price Performance
Industry’s Current Valuation
Comparing the industry with the Zacks 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 37.02X, higher than the S&P 500’s 18.1X and the sector’s 24.01X.
Over the past five years, the industry has traded as high as 40.63X, as low as 18.48X and at the median of 26.23X.
Price to Forward 12 Months
Bottom Line
Although the industry is benefiting from decent construction activity in both residential and non residential sectors, the trade war impacts linger.
Nevertheless, we believe investors should retain ABM Industries Incorporated (ABM - Free Report) , Limbach Holdings, Inc. (LMB - Free Report) and Rollins, Inc. (ROL - Free Report) in their portfolios as these stocks carry a Zacks Rank #3 (Hold).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Building Maintenance Services Stocks' Near-Term Outlook Dreary
The companies grouped under the Building Maintenance Services category are providers of a wide range of services, including electrical, lighting, cleaning, repair, replacement, heating, ventilation, air-conditioning (HVAC), plumbing, landscaping and pest control.
Here are the industry’s three major themes:
Zacks Industry Rank Indicates Dull Prospects
The Zacks Building Products - Maintenance Service industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #242. This rank places it in the bottom 4% of more than 250 Zacks industries.
The group’s Zacks 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 outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily lowering their estimates. Over the past year, the industry’s consensus earnings estimate for 2019 has moved down 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 Lags S&P 500 and Sector
The Zacks Building Products - Maintenance Service industry has underperformed the Zacks S&P 500 composite and the broader Zacks Business Services Sector over the past year.
The industry has seen an 8.1% decline over the said period against the S&P 500 composite and the broader sector’s rise of 18.5% and 21.2%, respectively.
One-Year Price Performance
Industry’s Current Valuation
Comparing the industry with the Zacks 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 37.02X, higher than the S&P 500’s 18.1X and the sector’s 24.01X.
Over the past five years, the industry has traded as high as 40.63X, as low as 18.48X and at the median of 26.23X.
Price to Forward 12 Months
Bottom Line
Although the industry is benefiting from decent construction activity in both residential and non residential sectors, the trade war impacts linger.
None of the stocks in the Zacks Building Products - Maintenance Service space currently sport a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nevertheless, we believe investors should retain ABM Industries Incorporated (ABM - Free Report) , Limbach Holdings, Inc. (LMB - Free Report) and Rollins, Inc. (ROL - Free Report) in their portfolios as these stocks carry a Zacks Rank #3 (Hold).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>