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ABM Industries (ABM) Gains on Strategic Acquisitions & Vision 2020

We recently issued an updated report on ABM Industries Incorporated ABM.

Shares of ABM Industries have gained 5.8% compared to 65.1% increase of the industry it belongs to.

ABM Industries' strategy entails growth through acquisitions, while maintaining desirable profit margins. The acquisition of GCA Services Group expanded the company’s long-term operational and financial position. It is making meaningful contributions to ABM Industries' overall operational results predominantly within Technology & Manufacturing, Business & Industry and Education segments.

ABM is currently executing 2020 Vision, a comprehensive transformation initiative, aimed at achieving operational improvement and vertical realignment. As part of this plan, the company is upgrading its human-resources information, labor management and enterprise-resource planning systems. It is utilizing technology to enhance account planning, labor management, payroll and procurement. ABM is centralizing many of its back-office functions via Enterprise Services Center in Sugar Land.

Meanwhile, ABM Industries' debt-to-capital ratio of 0.34 was higher than the industry's 0.22. An increasing debt to capitalization ratio indicates that the proportion of debt to finance the company’s assets is on the rise and so is the risk of insolvency. Further, cash and cash equivalent balance of $229 million at the end of third-quarter fiscal 2020 was well below the long-term debt level of $664.2 million. This indicates that the company doesn’t have enough cash to meet this debt burden.

Zacks Rank and Other Stocks to Consider

ABM Industries currently carries a Zacks Rank #2 (Buy).

Investors interested in the broader Business Services sector can also consider stocks like CRA International, Inc. CRAI, Gartner, Inc. IT and Insperity, Inc. NSP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings (three to five years) growth rate for CRA International, Gartner and Insperity is estimated at 13%, 13.5% and 15%, respectively.

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