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Strategic Buyouts Aid ABM Industries (ABM), Debt Load Ails

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ABM Industries Inc. (ABM - Free Report) is currently benefiting from investor-oriented moves and strategic acquisitions. However, low liquidity is a headwind.

ABM Industries reported impressive third-quarter fiscal 2022 results, with both earnings and revenues beating the Zacks Consensus Estimate.  Adjusted earnings (excluding 9 cents from non-recurring items) from continuing operations came in at 94 cents per share, beating the consensus mark by 3.3% and increasing 4.4% from the last fiscal year’s quarterly figure. Total revenues of $1.96 billion also surpassed the consensus estimate by 1.8% and improved 27.1% from last fiscal year’s quarterly figure.

How Is ABM Faring?

ABM Industries' strategy entails growth through strategic acquisitions and organic investment. The 2021 buyout of Able Services strengthens its engineering and technical services, expands its sustainability and energy efficiency offerings, and its core businesses and key geographies.

Further, ABM's multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiencies, developing its talent management system capabilities, expanding data usage and modernizing the digital ecosystem.

We are also impressed with ABM Industries’ endeavors in rewarding its shareholders through dividend payments and share repurchases. In fiscal 2021, it paid out $51 million as dividends but did not repurchase any shares. In fiscal 2020, ABM returned $49.3 million through dividend payments and $5.1 million through share buybacks.

In fiscal 2019, ABM Industries returned $47.7 million of dividend payments to its shareholders but did not repurchase any shares.  Such moves mirror ABM’s commitment to adding shareholder value and emphasize its confidence in business. These initiatives buoy investors’ optimism on the stock and augment the earnings per share.

ABM Industries' current ratio (a measure of liquidity) at the end of July was pegged at 1.21, lower than the current ratio of 1.45 reported at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank and Stocks to Consider

ABM Industries currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. (CAR - Free Report) , Automatic Data Processing, Inc. (ADP - Free Report) and CRA International, Inc. (CRAI - Free Report) .

Avis Budget sports a Zacks Rank #1 at present. CAR has an earnings growth rate of 108.4% for 2022.

Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.

ADP carries a Zacks Rank #2 (Buy) at present. ADP has a long-term earnings growth expectation of 12%.

ADP delivered a trailing four-quarter earnings surprise of 5%, on average.

CRA International carries a Zacks Rank of 2, currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.

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