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Transformational Initiatives Aid ABM Amid Increasing Costs
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ABM Industries, Inc. (ABM - Free Report) is benefiting from its transformational initiatives. The company’s 2020 Vision and ELEVATE plan reinforces strategic positioning and boost profitability.
ABM reported mixed second-quarter fiscal 2023 results, wherein earnings beat the Zacks Consensus Estimate, while revenues missed the same. Adjusted earnings (considering 12 cents from non-recurring items) from continuing operations came in at 90 cents per share, which beat the consensus estimate by 4.7% and increased 1% from the last fiscal year’s quarterly figure.
Total revenues of $1.98 billion missed the consensus mark by 1.5% but improved 4.5% from the last fiscal year’s quarterly figure. The upside was backed by solid segmental performance, strength from new accounts which came online late last year and the acquisition of RavenVolt. Quarterly revenue growth included 2.3% organic growth and a 2.2% upside from acquisitions.
Factors Favoring ABM
ABM initiated a transformative initiative called "2020 Vision" in 2015 to achieve long-term profitable growth through an industry-based go-to-market approach. The company centralized key functions, strengthened sales capabilities and invested in service delivery tools and processes, enhancing its offerings and positioning as an integrated facilities management company.
ABM's strategic plan, "ELEVATE," focuses on acquisitions, talent management, data usage and digital modernization to drive organic growth and profitability. The acquisition of RavenVolt in 2022 expands ABM's Technical Solutions and eMobility businesses.
ABM also rewards shareholders through dividend payments and share repurchases, demonstrating its commitment to value creation and confidence in the business. The company paid $51.9 million, $51 million and $49.3 million as dividends in fiscal 2022, 2021 and 2020, respectively. ABM returned $9.8 million and $5.1 million as share repurchases in 2022 and 2020 respectively.
ABM's current ratio at the end of the second quarter was pegged at 1.53, higher than the current ratio of 1.3 reported at the end of the first quarter of fiscal 2023 and 1.18 reported at the end of the prior-year quarter. It indicates that the company will have no problem meeting its short-term debt obligations.
A Major Concern
ABM' operating expenses have seen year-over-year increases, which have impacted the bottom line. During fiscal 2022, operating expenses of $6.76 billion increased 28.5% year over year. The same rose 2% year over year in fiscal 2021.
Zacks Rank and Stocks to Consider
ABM currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services can consider the following stocks:
Avis Budget (CAR - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Avis Budget’s revenues suggests a decline of 1.6% year over year to $3.19 billion and the same for earnings indicates a 38.4% plunge to $9.82 per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 65.2%.
Maximus (MMS - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.9% year over year to $1.2 billion and the same for earnings indicates a 46.2% rise to $1.14 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.
MMS has a VGM Score of B and presently flaunts a Zacks Rank of 1.
Rollins (ROL - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Rollins’ revenues suggests growth of 12.6% year over year to $803.6 million and the same for earnings indicates a 15% increase to 23 cents per share. The company has an impressive earning surprise history, beating the consensus mark in three of the four trailing quarters and missing on one instance, the average surprise being 5.53%.
ROL currently has a Zacks Rank #2 (Buy) and a Growth Score of A.
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Transformational Initiatives Aid ABM Amid Increasing Costs
ABM Industries, Inc. (ABM - Free Report) is benefiting from its transformational initiatives. The company’s 2020 Vision and ELEVATE plan reinforces strategic positioning and boost profitability.
ABM reported mixed second-quarter fiscal 2023 results, wherein earnings beat the Zacks Consensus Estimate, while revenues missed the same. Adjusted earnings (considering 12 cents from non-recurring items) from continuing operations came in at 90 cents per share, which beat the consensus estimate by 4.7% and increased 1% from the last fiscal year’s quarterly figure.
Total revenues of $1.98 billion missed the consensus mark by 1.5% but improved 4.5% from the last fiscal year’s quarterly figure. The upside was backed by solid segmental performance, strength from new accounts which came online late last year and the acquisition of RavenVolt. Quarterly revenue growth included 2.3% organic growth and a 2.2% upside from acquisitions.
Factors Favoring ABM
ABM initiated a transformative initiative called "2020 Vision" in 2015 to achieve long-term profitable growth through an industry-based go-to-market approach. The company centralized key functions, strengthened sales capabilities and invested in service delivery tools and processes, enhancing its offerings and positioning as an integrated facilities management company.
ABM's strategic plan, "ELEVATE," focuses on acquisitions, talent management, data usage and digital modernization to drive organic growth and profitability. The acquisition of RavenVolt in 2022 expands ABM's Technical Solutions and eMobility businesses.
ABM Industries Incorporated Revenue (TTM)
ABM Industries Incorporated revenue-ttm | ABM Industries Incorporated Quote
ABM also rewards shareholders through dividend payments and share repurchases, demonstrating its commitment to value creation and confidence in the business. The company paid $51.9 million, $51 million and $49.3 million as dividends in fiscal 2022, 2021 and 2020, respectively. ABM returned $9.8 million and $5.1 million as share repurchases in 2022 and 2020 respectively.
ABM's current ratio at the end of the second quarter was pegged at 1.53, higher than the current ratio of 1.3 reported at the end of the first quarter of fiscal 2023 and 1.18 reported at the end of the prior-year quarter. It indicates that the company will have no problem meeting its short-term debt obligations.
A Major Concern
ABM' operating expenses have seen year-over-year increases, which have impacted the bottom line. During fiscal 2022, operating expenses of $6.76 billion increased 28.5% year over year. The same rose 2% year over year in fiscal 2021.
Zacks Rank and Stocks to Consider
ABM currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Business Services can consider the following stocks:
Avis Budget (CAR - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Avis Budget’s revenues suggests a decline of 1.6% year over year to $3.19 billion and the same for earnings indicates a 38.4% plunge to $9.82 per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 65.2%.
CAR has a Value Score of A and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Maximus (MMS - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.9% year over year to $1.2 billion and the same for earnings indicates a 46.2% rise to $1.14 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.
MMS has a VGM Score of B and presently flaunts a Zacks Rank of 1.
Rollins (ROL - Free Report) : For second-quarter 2023, the Zacks Consensus Estimate of Rollins’ revenues suggests growth of 12.6% year over year to $803.6 million and the same for earnings indicates a 15% increase to 23 cents per share. The company has an impressive earning surprise history, beating the consensus mark in three of the four trailing quarters and missing on one instance, the average surprise being 5.53%.
ROL currently has a Zacks Rank #2 (Buy) and a Growth Score of A.