Our first idea is an industrial company that clobbered estimates for eight consecutive quarters. Our second recommendation is some great profit-taking on a previous selection.
Buy: ABM Industries (ABM)
From The Periscope Report
ABM Industries (ABM) dominates two different markets. It provides end-to-end facility solutions services, including building maintenance, energy solutions, commercial cleaning, janitorial and repair, electrical, landscaping, and security services. It also owns the largest chain of parking lots in the U.S.
The sell-side was expecting net earnings of $0.43 per share for this quarter, up from $0.31 per share a year ago. We said ABM would beat estimates for the 8th quarter in a row and we were right. Sales rose 4% YoY to $1.31 billion, which met estimates. Net earnings increased 58% to $0.49 per share, which clobbered estimates by six cents. Management also increased its earnings guidance for fiscal 2017 (ending October).
Management expects to achieve $10 - $12 million in cost-savings during the second half of fiscal 2017. CEO Scott Salmirs thinks he can get 100 basis points of adjusted EBITDA margin accretion in fiscal 2017.
Management raised its guidance for fiscal 2017 (ending October), with Non-GAAP net earnings expected to be $1.85 - $1.95 per share, up from prior guidance of $1.80 - $1.90 per share, and up from the $1.74 per share ABM earned in fiscal 2016.
This was the second quarter for ABM as a new company with new reporting segments, and it was a great quarter as ABM clobbered estimates. ABM has completed Phase I of a massive restructuring to focus on businesses that it dominates and get rid of businesses where it does not. This will improve margins greatly in fiscal 2017 and 2018, which management has forecasted. Keep adding to your position in this market dominator, as we have faith in the new CEO and CFO to execute the restructuring.
Tom Byrne, The Periscope Report, t2byrne@gmail.com, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602-9799, 406-465-4663, June 2017