ABM Industries (ABM) reported fiscal second-quarter EPS of $0.28, above the Zacks Consensus Estimate of $0.26 but 12% lower than the prior-year EPS. Growth at the Engineering and Parking divisions were offset by declines at the other two divisions, Janitorial and Security.
The company’s top line growth remains restricted by the decline in commercial office building occupancy and rental rates in the U.S. ABM depends highly on acquisitions for growth, but has not indulged in any major acquisitions in the past two years.
Therefore, we downgrade our rating on ABM from Neutral to Underperform with a target price of $20.00. Currently, we have a Zacks #5 Rank (Strong Sell) on ABM shares.Zacks Investment Research
