ABM ABM stock has had an impressive run over the past three months. The company’s shares have ascended 13.4%, outpacing the industry’s 1.8% rise and the Zacks S&P 500 Composite's 10.8% rally.
3-Month Share Price Performance
Let us delve into the factors that have contributed to the company’s outperformance.
Unprecedented Sales & Organic Revenue Expansion
In the second quarter of fiscal 2026, ABM achieved a record $1.2 billion in sales bookings for the first half of the year. This indicates strong market demand for its services and the success of its customer acquisition strategies.
In the first quarter of fiscal 2026, ABM's organic revenues grew 5.5% year over year, moving up to 6.1% in the following quarter. Capitalizing on the lofty sales bookings, expectations around sustained momentum in organic revenues, which support the top line, are further solidified.
WGNSTAR Buyout Completion
ABM completed the WGNSTAR acquisition at the beginning of the second quarter of fiscal 2026. This buyout bolstered the company’s presence within the semiconductor fabrication environment.
During the second-quarter fiscal 2026 earnings call, Scott Salmirs, president, CEO and director, stated that the company has landed “tens of millions of dollars in new business,” hinting at the immediate benefits enjoyed from ABM’s market strength, facilitated by WGNSTAR. Moreover, this buyout led to delivering high double-digit growth in organic revenues across the company’s semiconductor market.
FCF Recovery Bolsters Liquidity
The company ended the second quarter of fiscal 2026 with a current ratio of 1.46. A current ratio exceeding 1 bodes well with investors as it suggests efficient coverage of short-term obligations. ABM’s liquidity position is better than its peers, as evidenced by an industry average of 1.13.
ABM recorded $71.2 million in free cash flow (FCF) for the first six months of 2026 compared with the preceding year’s negative FCF of $107.8 million. It marks a hefty FCF enhancement worth nearly $180 million in the first six months. As the company recovered FCF, it raised management’s prospects to pay off short-term obligations, bolstering ABM’s liquidity position.
Reaffirmed 2026 Outlook Raises Investors’ Rapport
In the second quarter of fiscal 2026, ABM reaffirmed its full-year outlook, aiming at the top end of 3-4% organic growth and a 4-5% top-line improvement. The reaffirmed guidance indicates consistency that accumulates premium in the market. Investors gain confidence as sticking to a growth rate is a sign of a competitive moat and a resilient business model. ABM’s outlook acts as a safety net that leads to an increase in stock prices.
Zacks Rank & Stocks to Consider
ABM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Coherent Corp. COHR and AppLovin APP.
Coherent presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
COHR has a long-term earnings growth expectation of 46.8%.
Coherent delivered a trailing four-quarter earnings surprise of 6.2% on average.
AppLovin currently has a Zacks Rank of 2. APP has a long-term earnings growth expectation of 38.8%.
AppLovin delivered a trailing four-quarter earnings surprise of 8.4%, on average.
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ABM Industries Incorporated (ABM): Free Stock Analysis Report
Coherent Corp. (COHR): Free Stock Analysis Report
AppLovin Corporation (APP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).