ABM Stock Rises 6% Since Q3 Earnings and Revenues Beat Estimates

ABM ABM reported better-than-expected third-quarter fiscal 2026 results.

The earnings beat and raised EPS guidance impressed investors as the stock jumped 5.7% since the company released results on Sept. 8.

ABM posted adjusted earnings of $1.04 per share, which increased 27% year over year and surpassed the Zacks Consensus Estimate of $1.01 by 3%. Higher segment operating profit, lower tax expense and reduced ongoing corporate costs supported the bottom line.

Revenues rose 4.2% to $2.32 billion and beat the consensus mark of $2.30 billion by 0.7%. Growth was led by Manufacturing & Distribution and Aviation. Semiconductor, microgrid and data center-related revenues reached nearly $775 million through nine months, rising 26% organically.

ABM Industries Incorporated Price, Consensus and EPS Surprise

ABM Industries Incorporated price-consensus-eps-surprise-chart | ABM Industries Incorporated Quote

ABM Revenue Growth Led by M&D and Aviation

Manufacturing & Distribution revenues climbed 17.6% year over year to $481 million, including 7.8% organic growth and 9.9% growth from acquisitions. The increase reflected client expansions and the WGNSTAR acquisition. Aviation revenues rose 12.5% to $328.1 million, supported by healthy travel demand and the continued ramp of the Heathrow Airport contract.

Business & Industry revenues declined 2.6% to $1.01 billion, reflecting the exit of a large U.K.-based client and West Coast softness. Education revenues were nearly flat, up 0.3% to $235.8 million.

ABM Industries Manages ATS Project Timing

Technical Solutions revenues increased 4.2% to $259.9 million, with organic growth of 2.1% and acquisitions adding another 2.1%. Strong HVAC and battery energy storage system activity was partly offset by microgrid project delays tied to an important client.

The segment generated operating profit of $21.5 million, up 10.8%, while margin improved to 8.3% from 7.8% on favorable service mix. Management said about $15 million of projects were deferred in the quarter, with nearly all expected to land in the fourth quarter and a small portion in the first quarter of fiscal 2027.

ABM Expands High-Growth Technology Exposure

Semiconductor revenues reached about $300 million through the first nine months of fiscal 2026 and grew 65% organically. Microgrid revenues were about $300 million, up 17% organically, while data center revenues totaled roughly $175 million and advanced 8% organically. Together, these markets represented more than 11% of company revenues and carried double-digit blended operating margins.

Management said WGNSTAR is tracking well above its earlier $120-$130 million annualized revenue expectation. ABM reported two or three cross-sells across the combined semiconductor client base. The data center pipeline is also a multiple of its year-ago level, while a roughly $20 million Army Corps of Engineers microgrid project is expected to be executed in 2027.

ABM Industries Shows Better Margin Execution

On a GAAP basis, net income increased 18.9% to $49.7 million, or 84 cents per share, from $41.8 million, or 67 cents. Selling, general and administrative expenses declined 3.5% to $171.3 million. Adjusted EBITDA increased 11% to $139.6 million.

Segment operating margin was 7.7%, flat year over year but up 40 basis points sequentially. Business & Industry margin expanded to 7.4% from 7.1%, and Education margin improved to 9.7% from 9%.

Aviation margin fell to 5.6% from 6.8% as airline customers sought cost relief amid higher jet fuel costs. Manufacturing & Distribution margin declined to 8.4% from 8.9%, reflecting growth investments and nearly $4 million of incremental WGNSTAR amortization. Excluding that amortization, the segment margin was 9.2%.

ABM Strengthens Cash Flow and Leverage

Third-quarter operating cash flow was $146.8 million and free cash flow was $128.4 million. Through nine months, operating cash flow increased to $275 million from $101 million, while free cash flow rose to $199.6 million from $42.4 million, supported by working-capital management and ERP stabilization.

Total indebtedness ended the quarter at $1.8 billion, while leverage improved to 2.9X from 3.2X in the previous quarter. Available liquidity was $605.8 million, including $110.5 million of cash and equivalents. ABM also established a $300 million accounts receivable financing facility.

ABM Industries Raises Fiscal 2026 Outlook

ABM raised its adjusted earnings outlook to $3.95-$4.10 per share from $3.85-$4.15, increasing the midpoint. The midpoint ($4.02) of the guided range is higher than the Zacks Consensus Estimate of $3.97.

Organic revenue growth is still expected toward the high end of 3-4%, with total revenue growth toward the high end of 4-5%. Segment operating margin is now projected to be in the band of 7.7-7.8% compared with the prior 7.8-8% range.

The company lifted its full-year operating cash flow expectation to about $300 million and free cash flow to about $210 million, up $25 million from the prior free cash flow outlook. Interest expense is still expected to be $110 million, and the normalized tax rate remains at 29-30%.

ABM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot

Fiserv, Inc. FISV reported second-quarter 2026 adjusted earnings of $1.84 per share, missing the Zacks Consensus Estimate of $1.89 by 2.6%. Adjusted earnings declined 26% from the year-ago quarter as profitability contracted sharply.

GAAP revenues of $5.29 billion beat the consensus mark of $5.05 billion by 4.8% but decreased 4% year over year.

Republic Services, Inc. RSG reported better-than-expected second-quarter 2026 results.

RSG’s adjusted earnings of $1.85 per share grew 4.5% year over year and surpassed the Zacks Consensus Estimate of $1.81 by 2.2%. Revenues increased 4.6% to $4.43 billion and beat the consensus mark of $4.36 billion by 1.5%.

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