ABM Dips 4% On 4Q Profit Miss; Street Sees 19% Upside

Shares of ABM Industries fell 4.1% in Wednesday’s extended market trading after the integrated facility solution provider reported lower-than-expected 4Q earnings. The company’s adjusted EPS of $0.69 fell short of the Street’s estimates of $0.70 but improved 4.5% year-on-year.

ABM’s (ABM) 4Q revenue declined 9.9% to $1.48 billion year-over-year, reflecting the negative impact of the COVID-19 pandemic on the overall operating environment. However, the top-line surpassed analysts’ expectations of $1.43 billion.

The company noted that, “Revenue declines were primarily driven by pandemic-related client disruptions, such as facility closures and service scope changes, particularly within the Company’s Aviation and Technical Solutions segments. Higher demand for COVID-19 related work orders continued, particularly in the Business & Industry and Technology & Manufacturing segments, which partially offset the overall revenue decline.”

For the first quarter of fiscal 2021, the company anticipates adjusted EPS of between $0.60 and $0.65. (See ABM stock analysis on TipRanks)

ABM also announced that its board of directors raised quarterly cash dividend by 2.7% to $0.19 per share. At yesterday’s closing price of $40.34, the hike reflects an annualized dividend yield of 1.9%.

Ahead of its earnings, C.L. King analyst David C Silver reiterated his Buy rating on the stock and the price target of $45 (11.6% upside potential). Silver pointed out that the strong adoption of ABM’s EnhancedClean disinfection program is driving higher-margin growth.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 2 Buys and 1 Hold. The average price target stands at $48 and implies upside potential of about 19% to current levels. Shares have increased about 7% year-to-date.