Baird raises ABM Industries shares target on earnings beat By Investing.com

On Monday, Baird has adjusted its price target for ABM Industries (NYSE: NYSE:) shares, increasing it to $49.00 from the previous $48.00 while keeping the stock’s rating at Neutral. The revision follows ABM Industries’ recent earnings report, which surpassed expectations and led to an upward revision of the company’s financial guidance.

ABM Industries reported year-over-year improvements across nearly all of its business segments, although these were somewhat balanced out by a rise in corporate expenses. The adjusted EBITDA remained steady when excluding a one-time gain from the previous year.

A highlight for the company was the acquisition of significant new business, totaling approximately $1 billion year to date, compared to around $1.6 billion throughout the prior year. This includes a substantial multi-year micro-grid project valued at $180 million.

The firm also noted ABM Industries’ better-than-anticipated contribution from its Business & Industry (B&I) segment. Additionally, the company demonstrated improved free cash flow (FCF), which has facilitated share buybacks—a strategy that Baird considers the best use of incremental capital at present.

In light of these developments, Baird’s estimates for ABM Industries remain at the high end of the company’s revised guidance range. The analyst’s commentary highlighted the positive aspects of ABM Industries’ performance, including strong new business wins and effective capital management.

In other recent news, ABM Industries has reported a solid financial performance for the second quarter of 2024, with growth in several business segments and a strong cash flow.

The company has raised its full-year adjusted earnings per share (EPS) guidance to $3.40 to $3.50, indicating confidence in its strategic initiatives and operational efficiencies. CEO Scott Salmirs highlighted record-breaking new business wins and robust organic growth prospects.

ABM Industries also continues its share repurchases, having bought back approximately 555,000 shares. The company is optimistic about surpassing its previous year’s record revenue of $1.6 billion, with expected strong performances in their Aviation, Technical Solutions, and Education segments.

While the B&I segment experienced a slight year-over-year decline in revenue, the Aviation, Manufacturing & Distribution, and Education segments saw revenue increases of 4.8% and 4.1% respectively. However, some declines are anticipated in the Manufacturing & Distribution segment. These are the recent developments in ABM Industries’ financial performance.

InvestingPro Insights

ABM Industries’ recent financial performance and strategic moves have been recognized by Baird’s revised price target. Complementing this analysis, InvestingPro data and tips offer additional insights. With a current market capitalization of $3.2 billion and a P/E ratio standing at 13.22, ABM Industries demonstrates a potentially attractive valuation for investors. The company’s PEG ratio, which is a measure of the stock’s price relative to its earnings growth, is notably low at 0.4, suggesting that ABM may be undervalued based on its growth potential.

Investors might also take interest in the company’s strong shareholder returns, as highlighted by several InvestingPro Tips. ABM has been aggressively buying back shares and has raised its dividend for three consecutive years, with an impressive track record of maintaining dividend payments for 54 consecutive years. Additionally, analysts have revised their earnings upwards for the upcoming period, and the company has been profitable over the last twelve months. Moreover, ABM’s stock generally trades with low price volatility, which might appeal to risk-averse investors.

For those seeking further in-depth analysis, InvestingPro offers additional tips that delve into ABM’s financial health, such as its strong return over the last three months and the fact that its liquid assets exceed short-term obligations. To explore these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are over 12 additional tips available on InvestingPro that could further inform investment decisions regarding ABM Industries.

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