It has been about a month since the last earnings report for ABM Industries (ABM). Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ABM Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
ABM Industries Beats Q4 Earnings Estimates
ABM Industries reported impressive fourth-quarter fiscal 2024 results, wherein earnings per share (EPS) and revenues beat the Zacks Consensus Estimate.
ABM’s EPS (excluding $1.1 from non-recurring items) was 90 cents, which outpaced the Zacks Consensus Estimate by 4.7% while declining 10.9% on a year-over-year basis. Total revenues of $2.2 billion surpassed the consensus mark by 4.3% and increased 4% from the year-ago quarter.
ABM's Segmental Revenues
Technical Solutions gained 34.9% from fourth-quarter fiscal 2023 to $257.4 million. The metric outpaced our estimate of $212.2 million. Strong microgrid project activity and growth in ABM’s critical business fueled this segment.
The Aviation segment’s revenues increased 11.4% from the year-ago quarter to $276.5 million and beat our estimate of $250 million. Strong travel markets and wins from airport and airline businesses drove this segment’s revenues.
The Education segment’s revenues were $230 million, a marginal rise from the year-ago quarter. It missed our estimate by a slight margin. ABM onboarded new clients, which drove this segment’s revenues.
Revenues from the Manufacturing & Distribution segment decreased to $387.7 million, surpassing our expectations by a slight margin. This segment’s revenues were driven by the rebalancing of work by a large e-commerce customer and the exit of a sizable client that failed to meet the company’s financial hurdles.
The Business & Industry segment’s revenues declined by a slight margin on a year-over-year basis to $1 billion and outpaced our estimate of $991.9 million.
Profitability Performance of ABM Industries
Adjusted EBITDA was $128 million, down 11% from the year-ago quarter. The adjusted EBITDA margin was 6.2%, decreasing 60 basis points from fourth-quarter fiscal 2023.
ABM's Balance Sheet & Cash Flow
ABM Industries exited fourth-quarter fiscal 2024 with cash and cash equivalents of $64.6 million compared with $86.3 million at the end of the preceding quarter. The long-term debt (net) was $1.3 billion flat in the third quarter of fiscal 2024. Net cash generated by operating activities was $30.3 million for the quarter. The free cash flow amounted to $15.5 million.
ABM Industries' FY25 Guidance
The company raised its EPS guidance for fiscal 2025. ABM expects an adjusted EPS of $3.6-$3.8 compared with the preceding quarter’s view of $3.48-$3.55.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, ABM Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ABM Industries has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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