Why ABM Industries Stock May Not Be a Safe Bet After All

ABM is up 8% since the start of the year

May 12, 2022 at 10:16 AM
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ABM Industries Incorporated (NYSE:ABM) is one of the world’s largest providers of integrated facility services throughout the United States, the United Kingdom, and other international locations. ABM provides a variety of facility services that includes janitorial, engineering, parking, electrical & lighting, energy solutions, HVAC & mechanical, landscape & turf, and mission critical solutions.

ABM stock has decreased about 17% in price compared to what it traded at a year ago and is down 18% since reaching its 52-week high of $54.00 in late April. Additionally, shares of the facility services company have dropped in price 7% over the past month. However, ABM stock is still up 8% year-to-date and have recovered 15% after dropping to a 52-week low of $38.44 in December. ABM Industries Incorporated also offers a dividend yield of 1.71% with a forward dividend of $0.78.

Furthermore, ABM stock’s fundamentals provide a mix-match of positive and negative attributes that make ABM a risky investment. To begin with, the service provider holds $1.15 billion in total debt on their balance sheet and just $46.6 million in cash. ABM Industries has also struggled to convert large revenue numbers into profits, which has left them with an inflated price-earnings ratio of 23.55, despite having a relatively low price-sales ratio of 0.47.

This gap is expected to get larger with ABM Industries estimated to grow revenues 23.6% and earnings just 1.1% for fiscal 2022. Nonetheless, the facility services company is estimated to increase revenues 3.7% and earnings 8% for fiscal 2023, which would signal a shift in the right direction. Still, ABM will need to improve their profit margins significantly before it can become a viable option for fundamentals-based investors.

 




 
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