ABM Industries today
ABM Industries
(As of 12/19/2024 5:23 PM ET)
- 52 week range
- $39.64
▼
$59.78
- Dividend yield
- 2.07%
- P/E ratio
- 21.13
- Target price
- $55.67
ABM Industries shares New York Stock Exchange: PRO fell more than 7% after its fourth-quarter report, opening up an attractive position for dividend growth investors. This dividend king has fallen to a critical support level near the middle of its long-term trading range, where support is likely to be solid.
The fourth quarter report gives the market no reason for such a strong sell-off, and there is every reason to believe that the recovery will be strong. The main culprits are cash flow, earnings and free cash flow, which are shrinking relative to the revenue upfront, but there is a mitigating factor.
ABM Industries dividend payment
- Dividend yield
- 2.07%
- Annual dividends
- US$1.06
- Annual dividend growth for 3 years
- 16.61%
- Dividend payout ratio
- 43.80%
- Next dividend payment
- February 3
ABM dividend history
Increased costs associated with business investment and growth opportunities deeply impacted results but enabled the business to maintain growth and stable returns on capital.
ABM Industries pays one of the highest dividends of any dividend king, with a yield of over 2.0% with shares around $50.
The company is paying out less than 30% of its earnings, including a recent 18% distribution increase, and could maintain annual growth for many years.
The balance is also strong.
Highlights at the end of 2024 include increases in debt and total liabilities offset by increases in assets, leaving equity unchanged and leverage low.
Long-term debt leverage is less than 1x equity.
ABM Industries’ growth is supported by business diversification
ABM Industries is a diversified facilities services company operating through five primary segments. Its markets include engineering solutions, aviation, business and industrial, and manufacturing and distribution, which produced mixed results for the quarter. Revenue growth of 4% was driven by 32% growth in technical solutions and 11% growth in aviation, offset by a 1% decline in B&I and M&D. B&I and M&D are impacted by macroeconomic headwinds and one-time losses per customer and are expected to return to growth in 2025.
Margin news is mixed, with margins shrinking and profits down year-over-year, but less than expected. Key details include adjusted earnings of $0.90, 400 basis points above the MarketBeat consensus, as well as sufficient cash flow to support the return on equity outlook and balance sheet health.
The company’s forecasts are optimistic. The company expects growth in all of its end markets in 2025 and issued strong guidance. Forecast adjusted earnings per share range from $3.60 to $3.80, the midpoint above analyst consensus.
Institutional inflows will support PRO share price in 2024
AB Industries’ institutional outlook is bullish on its stock price. Institutional activity throughout the year, including both quarters of the second half, is bullish, consistent with share prices moving to new highs and then bouncing off support as the market corrects. Institutions own more than 90% of the shares, so they create a strong tailwind that is unlikely to end given the 2025 outlook. The more likely scenario is that institutions will continue to buy these shares and may accelerate purchases now that they are down and worthless. The activities of analysts are less active. MarketBeat has only tracked three changes this year, all positive, raising the consensus 25% and indicating potential value as shares trade near $50.
The technical performance is promising. The ABM stock market fell, but reached the critical level of $50 and began to recover. Critical support is in the middle of the multi-year trading range, which is a strong target for technical traders. A move below this level would be bearish for the market and could result in a retest of support at the lower end of the range. However, a more likely scenario is that institutional investors will support the market for this business service at $50, which will eventually lead to a retest of the upper end of the range at almost $57.50.
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