Entering text into the input field will update the search result below

ABM Industries: Essential Staffing

Jun. 08, 2020 11:10 AM ETABM Industries Incorporated (ABM)1 Comment
The Stock Dudar profile picture
The Stock Dudar


  • ABM Industries provides essential and often unnoticed services that aren't going away any time soon.
  • A quintessential buy-and-hold company, ABM has rewarded shareholders over the long term.
  • Given the uncertainty in Q1 guidance, I'm uncomfortable paying anything more than long-term support levels at $28.50.

ABM Industries Inc. Overview

Founded in 1909, ABM Industries (NYSE:ABM) provides services, such as cleaning, electrical work, HVAC repair, landscaping, etc. through its 140,000+ employees throughout the world. You've probably seen or at least been impacted by their employees, as they maintain and clean airports, office spaces, parks, and power plants, etc. ABM is US-focused with a few international locations and is the 46th largest employer in the US Fortune 500, so their results can tell you quite a bit about the state of the US labor market. CEO Scott Salmirs has held the position for 5 years, with 17 years total experience with ABM, only the 7th CEO in the 110+ year company history.

Business Dynamics & Financials

ABM reports results from five segments, although I'll perform my analysis by service type below. Keep in mind that, these results, released on March 5th, are minimally impacted by COVID-19.

Business Aviation Manufacturing Education Tech Sol.
Q1 '20 Revenue $820.9M $238.7M $233.9M $208M $142M
Y/Y Rev Change -1.0% -5.4% -0.9% -0.4% 22%
Q1 '20 Op Profit $38.2M $5.6M $16.7M $11.2M $8.3M
Op Margin 4.7% 2.3% 7.1% 5.4% 5.9%

Source: ABM 1Q20 Earnings Slides

This may be how ABM chooses to break out the company's financials, but I think the more intuitive way to understand the business is by service provided.

Cleaning - Cleaning/general custodial is ABM's biggest service spanning 4 of 5 business segments. COVID-19 provides both headwinds and tailwinds for this service depending on the specifics. COVID-19 has triggered a need for enhanced cleaning in "essential" facilities, and I would expect that mentality to continue for years. The major downside is the lack of business, especially in the near term, as remote work and learning are given preference over onsite activity. Closed restaurants and remote education will naturally lead to less need to clean. Even within aviation, I expect

This article was written by

The Stock Dudar profile picture
I spent 14 years as an aerospace engineer before changing careers to a field where I could still be analytical while interacting more directly with people. I have been writing about stocks and actively investing since 2014. I enjoy reading Seeking Alpha articles as much as I enjoy writing them, and I am always looking for ways to broaden my knowledge of markets, particularly stocks.The following important disclaimer language applies to all posted content. Content consists of articles, blog posts, comments, direct messages, and any other writing on Seeking Alpha:The Stock Dudar's Seeking Alpha page has “followers” a term designated by Seeking Alpha. These followers have not been solicited by JRW Advisory Services (JRW) or its representatives, and the presence of these followers should not be considered testimonials or advertisements for JRW, its representatives, products or services. Positive comments or likes should not be construed as an endorsement of JRW, its representatives, products or services. Furthermore, negative comments are not restricted by the author or JRW in any way. JRW Advisory Services is the doing business as name for JRW Enterprises, LLC.Content (articles, blog posts, comments, direct messages, and any other writing on Seeking Alpha) is not a solicitation of business or an advertisement of JRW or any of its services or products. It is not an offer, solicitation or recommendation to purchase or sell any security.Content is subject to change at any time without notice based upon market or other conditions and is as current as the time posted. Content presented is believed to be factual and up to date, but accuracy is not guaranteed, has not been independently verified, nor should it be regarded as a complete analysis of the subjects discussed. Information regarding a company or security may be obsolete by the time it is published on Seeking Alpha and investors must therefore independently verify updated information regarding a company or investment. You are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.All investments carry some level of risk, including the potential loss of principal invested. Past performance is not an indicator of future performance. Content, including forward-looking statements, is not a guarantee or suggestion of any results, implied or otherwise. Investing involves risks, uncertainties and assumptions, and it is possible that actual results will differ materially from expectations derived from posted content. The reader should be aware that investing in securities involves, but is not limited to, the following risks: business, political, regulatory, liquidity, and inflation risks. Investing in foreign securities presents additional risks related to currency risk and changes to foreign policies and taxes.JRW and its representatives express no opinion as to whether any content is appropriate for a reader’s investment portfolio, strategy, financial situation, or investment objectives. Readers do not receive investment advisory, investment supervisory or investment management services, nor the initial or ongoing review or monitoring of the reader’s individual investment portfolio or individual needs. Therefore, no reader should assume that content published on Seeking Alpha is a substitute for individual personalized advice from an investment professional of the reader’s choosing. Factors that affect suitability include, but are not limited to individual risk tolerance, time-horizon, tax circumstances, estate planning, insurance requirements, and general financial situation. It remains the reader’s exclusive responsibility to review, evaluate and determine whether to accept or reject the content. Content is of a general nature and is intended for illustrative or educational purposes only. It does not constitute a recommendation of any investment strategy or product for a particular investor and is not intended to be used as the sole basis of any investment decisions, nor is it an opinion regarding the appropriateness of any investment. To the extent that any of the content may be deemed to be investment advice or a recommendation in connection with a particular security, such information is impersonal and not tailored to the investment needs of any specific person.Content is not intended to constitute legal or tax advice. The content’s general information should not be acted upon without obtaining specific legal and tax advice from a licensed professional of your own choosing.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (1)

I'm a long term holder. I wish I could have gotten more near the recent low. I'd add more under $30.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.