ABM - Upside F2Q on Aviation/ATS; Maintained F26 EPS Guide

Research evidence excerpt

ABM - Upside F2Q on Aviation/ATS; Maintained F26 EPS Guide

Truist Securities

Company Description

ABM Industries (ABM) is a leading provider of outsourced facility services including janitorial services, parking, facilities engineering and

technical services. The company is the largest provider of outsourced janitorial services in the United States and has an outsized exposure

to commercial office customers (we estimate 40% of revenue). ABM operates in five reporting segments: Business & Industry (47% of

revenue); Manufacturing & Distribution (19% of revenue); Education (11% of revenue); Aviation (13% of revenue); and Technical Solutions

(11% of revenue). Over the past decade, management has leveraged M&A to diversify into a range of adjacent service offerings such as

Engineering, Aviation Services and EV/Microgrid Systems. The company is one of the largest employers in North America with 113,000

total employees as of FY2025, of which roughly 45% are unionized. ABM is headquartered in New York City, New York and is listed on

the NYSE.

Investment Thesis

We believe ABM benefits from a defensive and highly cash-generative model. That being said, we think organic growth and ROIC will

remain low for the foreseeable future. Our Hold rating is based on a light catalyst path over the next 12 months and high leverage following

a recent acquisition likely restraining capital deployment.

Valuation and Risks

We value ABM using the following metrics: (1) EV/EBITDA multiples; and (2) FCF/Share multiples.

EV/EBITDA Multiple Valuation: ABM trades at a 7.5x EV/EBITDA multiple on our CY26 estimates. The five-year average is ~9x while

Facility Services peers trade at ~11x on average. We assume the company’s multiple continues to trend below the historical average and