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Why Hold Strategy is Apt for ABM Industries (ABM) Stock Now

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ABM Industries Incorporated (ABM - Free Report) is currently benefiting from growth through strategic acquisitions, as well as organic investments. The company’s revenues are expected to increase 4.9% and 3.6% year over year in fiscal 2023 and 2024, respectively.

ABM’s Tailwinds

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. ELEVATE is expected to significantly accelerate the company’s organic growth, improve its strategic and comprehensive positioning and reinforce profitability.

The recent acquisition of RavenVolt is part of ABM’s ELEVATE strategy and is aimed at expanding the company’s footprint in potential geographies and end markets. The acquisition will help expand ABM’s Technical Solutions service offerings, strengthening its foothold in EV infrastructure, power and bundled energy solutions markets. RavenVolt will also boost ABM’S eMobility business as a provider of customized power solutions in facilities that require additional power generation capacity to support EV charging.

ABM focuses on rewarding its shareholders through dividends. The company paid $51.9 million, $51 million and $49.3 million through dividends in fiscal 2022, 2021 and 2020, respectively. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.

Some Risks

ABM Industries' current ratio (a measure of liquidity) at the end of the October quarter was 1.15, lower than the current ratio of 1.21 reported at the end of the prior quarter. A decline in the current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank & Stocks to Consider

ABM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Trane Technologies (TT - Free Report)  and The Interpublic Group of Companies, Inc. (IPG - Free Report) .

Trane Technologies carries a Zacks Rank #2 (Buy) at present. TT has a long-term earnings growth expectation of 9.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Trane delivered a trailing four-quarter earnings surprise of 8.2% on average.

Interpublic currently sports a Zacks Rank #1. IPG has a long-term earnings growth expectation of 4.6%.

IPG delivered a trailing four-quarter earnings surprise of 8.2% on average.

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