Shares of ABM Industries, Inc. (NYSE: ABM) jumped as much as 13.4% in trading Thursday after the facility solutions provider reported fiscal second-quarter results that topped analyst expectations. The stock cooled off slightly at midday but was still up 11.3% at 11:05 a.m. EDT.
Quarterly revenue jumped 20.6% to $1.58 billion and net income fell 14.9% to $26.6 million, or $0.40 per share. Adjusted net income from continuing operations, which is what analysts try to estimate, dipped 4.1% to $0.47 per share, which came in ahead of the $0.43 analysts were looking for, according to Yahoo! Finance. Sometimes beating low expectations can drive a stock higher, even if there isn't any bottom-line growth.
Management also said that full-year adjusted earnings from continuing operations would be $1.85 to $1.95 per share, which was in line with the $1.94 analyst estimate.
Sometimes beating low expectations is what pushes a stock higher and that's what happening with ABM Industries today. Shares had fallen 22.4% in 2018 prior to the earnings release and clearly investors had been lowering expectations all year.
While shares are up big today, they could fall back to earth if the rest of 2018 doesn't live up to newly heightened expectations. In particular, I'm worried that full-year earnings guidance is at the very high end of what analysts expect, and if results come up short, the stock could pull back again.
10 stocks we like better than ABM Industries
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and ABM Industries wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 4, 2018