Shares of ABM ABM have had a decent run over the past three months. The stock has gained 6.4% compared with the industry’s 5.6% growth. The Zacks S&P 500 Composite rose 3.5% during that period.
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ABM has a Growth Score of B. This style score condenses key financial metrics to reflect a fair sense of the quality and sustainability of its growth.
The company’s third-quarter fiscal 2026 earnings are expected to increase 23.2% year over year. Its fiscal 2026 and 2027 earnings are projected to rise 15.4% and 9.3%, respectively. Revenues are anticipated to grow 5.3% in fiscal 2026 and 3% in fiscal 2027.
Factors That Bode Well for ABM’s Success
Segmental Performance Drives Growth: ABM maintains healthy top-line momentum, supported by broad-based segment growth and steady recurring business. Demand remains favorable across energy infrastructure, semiconductors and airport modernization. In the second quarter of fiscal 2026, Technical Solutions revenues jumped 27.2% year over year, driven by data centers, battery energy storage systems and recent acquisitions. Aviation revenues rose 19.5%, supported by healthy travel demand and new wins, including London Heathrow. Manufacturing & Distribution revenues increased 16.5%, aided by client expansions and the WGNSTAR acquisition, while Education revenues grew 1.9% to $232.2 million on price escalations.
Consistent Dividend & Share Buybacks: ABM has maintained a consistent record of shareholder returns through dividends and share repurchases. The company paid dividends of $57.5 million, $56.5 million and $65.6 million in fiscal 2023, 2024 and 2025, respectively, while repurchasing shares worth $138.1 million, $56.1 million and $122.2 million over the same periods. This trend continued in the first half of fiscal 2026, when ABM paid $34.2 million in dividends and repurchased $94.7 million of shares. The sustained pace of capital returns underscores management’s commitment to enhancing long-term shareholder value.
Robust Liquidity Supports Financial Flexibility: ABM’s liquidity position remains healthy, with a current ratio of 1.46 at the end of the second quarter of fiscal 2026, above the industry average of 1.13. The ratio, comfortably above one, indicates sufficient near-term assets to cover short-term obligations and supports financial flexibility.
Watch Out for These Risks to ABM Stock
Stiff Rivalry: Meanwhile, ABM operates in a highly competitive facilities management market, where aggressive bidding can constrain pricing power and margin expansion as labor and operating costs rise. Competition is intensifying around technology and service capabilities, requiring continued investment to protect market share. These dynamics can pressure profitability even as ABM pursues growth opportunities.
Rising Costs Weighing on Margins: Transportation, security and administrative disruptions, ramp-up costs associated with recent contract wins such as Heathrow Airport, an unfavorable contract mix and higher sales investments are weighing on ABM’s profitability. Weather-related expenses are also affecting Aviation margins. Together, these factors pose near-term margin risks despite continued underlying business growth.
ABM has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
A couple of better-ranked stocks in the broader Business Services sector are Bright Horizons Family Solutions Inc. BFAM and CBIZ, Inc. CBZ.
Bright Horizons Family Solutions carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 13.9%.
BFAM delivered a trailing four-quarter earnings surprise of 7.6%, on average.
CBIZ also holds a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 11.6%.
CBZ beat earnings estimates in three of the last four quarters and missed once, with an average earnings surprise of 8.9%.
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This article originally published on Zacks Investment Research (zacks.com).