Business services provider
ABM Industries Incorporated
) is scheduled to report its third-quarter fiscal 2014 results
after the closing bell on Sep 3. In the last reported quarter,
ABM's non-GAAP earnings fairly missed the Zacks Consensus Estimate.
Let's see how things are shaping up for this announcement.
Growth Factors in the Third Quarter
ABM has developed a platform to deliver an end-to-end service model
to its clients by realigning its operational structure to an
on-site, mobile and on-demand market based structure. This
realignment has improved its long-term growth prospects and
provides higher margin opportunities by enabling it to better
deliver end-to-end services to its clients across urban, suburban
and rural areas. The company further expects to extend its global
footprint and strengthen its position in existing markets through
both inorganic and organic growth across the industry verticals.
Recently, ABM acquired Airco Commercial Services Inc. for an
undisclosed amount to augment its Northern California presence.
Airco Commercial is a leading provider of heating, ventilation and
air conditioning (HVAC) service, energy solutions and building
controls in commercial and industrial buildings in Northern
California. With the acquisition, ABM is expected to provide
energy-efficient solutions to electrical, engineering, janitorial,
landscape, security and parking clients throughout the region. This
deal will likely strengthen its position in the market and unlock
additional values by generating incremental revenue stream and
minimizing operating expenses for clients.
ABM has a healthy pipeline of businesses with strength particularly
seen in its government business. The company expects to improve its
profitability with the seamless integration of acquired businesses
and newer contracts. The corporate restructuring initiatives are
also well on track to yield sustained long-term growth momentum.
Despite focused attempts to restructure its business, our proven
model conclusively shows that ABM is likely to miss earnings this
quarter as it lacks the key ingredients for a success recipe.
Negative Zacks ESP: Expected Surprise Prediction or
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is currently pegged at
-2.22%. This indicates likely earnings miss for the shares.
Zacks Rank #4 (Sell): ABM's Zacks Rank #4 further tilts the
predictive power of ESP in the negative direction. Note that stocks
with Zacks Ranks of #1, #2 and #3 have a significantly higher
chance of beating earnings. The Sell-rated stocks (#4 and #5)
should never be considered going into an earnings
Other Stocks to Consider
Here are some companies you may want to consider as our model shows
that these have the right combination of elements to post an
earnings beat this quarter:
Limoneira Company (
), earnings ESP of +12.50% and Zacks Rank #2 (Buy).
Shoe Carnival Inc. (
), earnings ESP of +5.88% and Zacks Rank #2 (Buy).
Zumiez, Inc. (
), earnings ESP of +4.55% and Zacks Rank #2 (Buy).
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