Truist Securities has adjusted its outlook on ABM Industries (NYSE: NYSE:ABM), a leading provider of facility solutions.
The firm increased its price target on the company's stock to $55.00, up from the previous target of $49.00. Despite the raised target, the firm has decided to maintain a Hold rating on the shares.
The adjustment follows ABM Industries' recent fiscal third-quarter report and an increase in the forecast for full-year 2024 earnings per share (EPS).
The company's performance has been notably strong, yet today's trading showed a significant drop in ABM's stock price, which fell 7.7% compared to the Russell 2000's decline of 1.6%.
The decline in ABM's share price is attributed to potential profit-taking by investors, as the stock had reached an all-time high the previous week.
Additionally, the stock's valuation had been trending above the historical norm, with earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples ranging between 8 and 9 times prior to the earnings announcement.
Despite the impressive recent momentum of ABM Industries, Truist Securities anticipates only modest earnings growth for the company in the fiscal year 2025. The firm's models predict an EPS growth of about 5% for that period.
In other recent news, ABM Industries has been making significant strides, with recent developments showcasing a strong performance and positive outlook.
The company's recent earnings report exceeded expectations, leading to an increase in their full-year adjusted EPS guidance to a range of $3.48 to $3.55.
The move reflects their confidence in a continued growth trajectory, with normalized free cash flow expected to be near the higher end of the $240 million to $270 million range.
Baird, a financial services firm, has responded to these developments by raising its price target for ABM Industries from $49 to $56.
Despite maintaining a Neutral rating, Baird has highlighted ABM Industries' successful execution in a challenging macroeconomic environment, especially in sectors like office space that have been hit hard.
ABM Industries' involvement in large-scale projects has also been noted, including a significant multi-year micro-grid project valued at $180 million. Furthermore, the company reported significant revenue growth in its Technical Solutions and Aviation segments, at 25% and 13% respectively.
InvestingPro Insights
As investors weigh Truist Securities' updated outlook on ABM Industries, real-time data and InvestingPro Tips offer additional context for the company's financial health and market performance. ABM Industries currently boasts a market capitalization of $3.22 billion, reflecting its significant presence in the facility solutions sector. While the company's P/E ratio stands at 21.12, a closer look at the adjusted P/E ratio for the last twelve months as of Q3 2024 reveals a higher figure of 25.22, indicating investors are paying more per share for the company's earnings than they have historically.
ABM Industries has demonstrated a commitment to shareholder returns, as evidenced by its consistent dividend payments over 54 years and the recent increase for the fourth consecutive year. This is particularly noteworthy when considering the company's gross profit margin, which at 13.51% for the last twelve months as of Q3 2024, suggests there may be room for improvement in operational efficiency. Despite recent price volatility, with a 10.25% drop in the stock price over the past week, ABM's long-term performance remains strong, with a 33.24% one-year total return.
For investors looking for more in-depth analysis, there are additional InvestingPro Tips available, which could provide further insights into ABM's stock performance and future outlook. For instance, management's aggressive share buybacks and the prediction of profitability this year are factors that could influence investment decisions. To explore these and other expert insights, interested readers can find more InvestingPro Tips on the dedicated ABM page.
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