Why ABM (ABM) Stock Is Down Today
Shares of facility services provider ABM Industries (NYSE:ABM) fell 10.4% in the afternoon session after the company reported mixed first quarter 2025 (fiscal Q2) results as its full-year EPS guidance slightly missed.
On the other hand, ABM beat analysts' organic revenue and EBITDA estimates. Market sentiment may remain cautious, especially with cash flow still under pressure as the company works through its ERP system transition. Overall, this was a softer quarter.
The shares closed the day at $46.62, down 9% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy ABM? Access our full analysis report here, it's free.
ABM's shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for ABM and indicate this news significantly impacted the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 9.3% on the news that the company reported underwhelming fourth quarter 2024 results: Sales were roughly in line, but the company recorded a significant increase in cash burn. .
The key issue for the quarter was a sharp decline in free cash flow, which fell to negative $122.9 million due to temporary disruptions from the company's new enterprise resource planning (ERP) system. Management expects these issues to normalize later in the year.
Looking ahead, the company raised the lower end of its full-year adjusted EPS guidance. Adjusted EBITDA margin guidance remained unchanged at 6.3% to 6.5%. Overall, this was a challenging quarter despite the improved guidance.
ABM is down 8.8% since the beginning of the year, and at $46.61 per share, it is trading 20.5% below its 52-week high of $58.61 from November 2024. Investors who bought $1,000 worth of ABM's shares 5 years ago would now be looking at an investment worth $1,268.
Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
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