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ABM Remains Poised for Healthy Growth on Vision 2020 Plan

On May 30, Zacks Investment Research updated the research report on leading provider of facility solutions, ABM Industries Inc. ABM.

ABM has embarked on a Vision 2020 Plan that outlines its vision for the next five years. The plan has three primary phases, the first of which is aimed at increasing the efficiency of the company through diligent execution of the operating plan and stringent cost-reduction activities. The second phase will focus on driving growth across the realigned verticals through effective realization of the cost savings from procurement, account management and other organizational changes. The final phase of the transformation will include accelerated growth impetus from the vertical alignment and account planning systems with a continuous focus on additional cost savings. These systematic and strategic plan of actions will likely help ABM to fuel its growth momentum.

Over the years, ABM has developed a platform to deliver an end-to-end service model to its clients by realigning its operational structure into an on-site, mobile and on-demand market based structure. This realignment has improved its long-term growth prospects and provides higher margin opportunities by enabling it to better deliver end-to-end services to its clients across urban, suburban and rural areas. The company further expects to extend its global footprint and strengthen its position in existing markets through both inorganic and organic growth across the industry verticals.

However, given the low cost of entry into the facility services business, ABM faces intense competition from local and national players. The company also faces indirect competition from building owners or tenants, who perform one or more of these services internally in order to cut costs, especially in the areas where external services are subject to sales tax. These strong competitive pressures limit the company’s success rate in bidding for profitable businesses and its ability to increase prices in accordance with the rising costs.

Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry include Exponent Inc. EXPO, CBIZ, Inc. CBZ and CEB Inc. CEB, each carrying a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ABM INDUSTRIES (ABM): Free Stock Analysis Report
EXPONENT INC (EXPO): Free Stock Analysis Report
CEB INC (CEB): Free Stock Analysis Report
CBIZ INC (CBZ): Free Stock Analysis Report
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