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ABM Industries Benefits From ELEVATE Plan and High Liquidity
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ABM Industries Incorporated’s (ABM - Free Report) shares have gained 17.1% in the past year, outperforming the industry and the Zacks S&P 500 composite’s growth of 10.3% and 11%, respectively.
One Year Price Performance
Image Source: Zacks Investment Research
ABM Industries reported impressive third-quarter fiscal 2024 results. The company’s EPS (excluding 86 cents from non-recurring items) was 94 cents, which outpaced the Zacks Consensus Estimate by 10.6% and gained 19% year over year. Total revenues of $2.1 billion surpassed the consensus mark by 2.7% and increased 3.3% from the year-ago quarter’s reported number.
How is ABM Doing?
ELEVATE, which is ABM's multi-year comprehensive strategic plan, a follow-on of the 2020 Vision launched in 2021, aims at providing clients with offerings that improve transparency and efficiencies, develop capabilities of its talent management system, expand data usage and modernize the digital ecosystem. This plan is anticipated to propel the company’s organic growth, better its strategic and comprehensive positioning and enhance profitability.
The 2022 RavenVolt buyout is a part of the ELEVATE strategy that targets expanding the company’s presence in new markets through strategic acquisitions. RavenVolt’s addition is expanding ABM’s Technical Solutions service offerings, strengthening its grounds in electric vehicle (EV) infrastructure, power and bundled energy solutions markets. The acquired company enhances ABM’s eMobility business as a provider of bespoke power solutions in facilities that require additional power generation capacity to support EV charging.
In fiscal years 2023, 2022 and 2021, the company distributed $57.5 million, $51.9 million and $51 million in dividends, respectively. Additionally, it returned $138.1 million and $97.5 million through share repurchases in fiscal 2023 and 2022, respectively, although no shares were repurchased in 2021.
Such strategies demonstrate ABM's dedication to improving shareholder value and its confidence in the business's long-term potential. The company’s robust cash position supports these initiatives. Notably, in the first nine months of fiscal 2024, ABM generated $275 million in free cash flow, outpacing the $194 million generated in fiscal 2023.
ABM’s current ratio (a measure of liquidity) at the end of the third quarter is pegged at 1.38, higher than the industry’s 0.92. This strong liquidity indicates ABM’s ability to meet its immediate liabilities without any issues, implying financial stability and operational flexibility.
Risks Factors for ABM Industries
A majority part of ABM’s workforce is unionized, which introduces additional complexities in labor management. If future collective bargaining negotiations do not go as planned, ABM could face strikes, increased labor costs or operational disruptions. The reputation of the company can be harmed and relationships with core clients can be affected.
Macroeconomic risks prevail over the company which could affect various segments. A fall in leisure or business travel could affect the company’s Aviation sector business significantly, while a further downturn in the commercial office market would pose threats to its Business & Industry segment.
ABM’s Zacks Rank & Stocks to Consider
ABM Industries carries a Zacks Rank #3 (Hold) at present.
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ABM Industries Benefits From ELEVATE Plan and High Liquidity
ABM Industries Incorporated’s (ABM - Free Report) shares have gained 17.1% in the past year, outperforming the industry and the Zacks S&P 500 composite’s growth of 10.3% and 11%, respectively.
One Year Price Performance
ABM Industries reported impressive third-quarter fiscal 2024 results. The company’s EPS (excluding 86 cents from non-recurring items) was 94 cents, which outpaced the Zacks Consensus Estimate by 10.6% and gained 19% year over year. Total revenues of $2.1 billion surpassed the consensus mark by 2.7% and increased 3.3% from the year-ago quarter’s reported number.
How is ABM Doing?
ELEVATE, which is ABM's multi-year comprehensive strategic plan, a follow-on of the 2020 Vision launched in 2021, aims at providing clients with offerings that improve transparency and efficiencies, develop capabilities of its talent management system, expand data usage and modernize the digital ecosystem. This plan is anticipated to propel the company’s organic growth, better its strategic and comprehensive positioning and enhance profitability.
The 2022 RavenVolt buyout is a part of the ELEVATE strategy that targets expanding the company’s presence in new markets through strategic acquisitions. RavenVolt’s addition is expanding ABM’s Technical Solutions service offerings, strengthening its grounds in electric vehicle (EV) infrastructure, power and bundled energy solutions markets. The acquired company enhances ABM’s eMobility business as a provider of bespoke power solutions in facilities that require additional power generation capacity to support EV charging.
In fiscal years 2023, 2022 and 2021, the company distributed $57.5 million, $51.9 million and $51 million in dividends, respectively. Additionally, it returned $138.1 million and $97.5 million through share repurchases in fiscal 2023 and 2022, respectively, although no shares were repurchased in 2021.
Such strategies demonstrate ABM's dedication to improving shareholder value and its confidence in the business's long-term potential. The company’s robust cash position supports these initiatives. Notably, in the first nine months of fiscal 2024, ABM generated $275 million in free cash flow, outpacing the $194 million generated in fiscal 2023.
ABM’s current ratio (a measure of liquidity) at the end of the third quarter is pegged at 1.38, higher than the industry’s 0.92. This strong liquidity indicates ABM’s ability to meet its immediate liabilities without any issues, implying financial stability and operational flexibility.
Risks Factors for ABM Industries
A majority part of ABM’s workforce is unionized, which introduces additional complexities in labor management. If future collective bargaining negotiations do not go as planned, ABM could face strikes, increased labor costs or operational disruptions. The reputation of the company can be harmed and relationships with core clients can be affected.
Macroeconomic risks prevail over the company which could affect various segments. A fall in leisure or business travel could affect the company’s Aviation sector business significantly, while a further downturn in the commercial office market would pose threats to its Business & Industry segment.
ABM’s Zacks Rank & Stocks to Consider
ABM Industries carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report) and Amadeus IT Group (AMADY - Free Report) .
AppLovin flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 26.21%, on average.
Amadeus IT Group carries a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 8.6%.
AMADY delivered a trailing four-quarter earnings surprise of 7%, on average.