Value
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.0 |
| P/S | 10.0 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 9.2 |
| PEG | 6.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.9x
- ▸PEG: 1.21
ABM · Why this verdict
Why ABM Industries (ABM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
ABM Industries screens attractively valued at 10 times forward earnings and demonstrates exceptional cash conversion at 179% of net income, but three of the last four quarters produced EPS misses, quality metrics sit just below the minimum acceptable threshold, and an elevated options put/call ratio of 1.40 argues for caution ahead of a fundamental reset.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow stands at 179% of net income, meaning the business generates substantially more cash than accounting earnings alone imply; this strong cash conversion provides a balance-sheet cushion that partially offsets the weaker reported earnings trend. Quality breakdown | Free cash flow remains above net income for the next 4 quarters, sustaining the superior conversion advantage. | →Stable |
| CounterFree cash flow that exceeds net income by a wide margin can reflect favorable working capital timing rather than structurally superior cash generation; if payables or receivables normalize in coming quarters, the conversion ratio may compress toward or below 100%. | ||
The stock trades at 10.1 times forward earnings with a PEG ratio of 1.13, a combination that screens as attractively valued within the specialty business services sector; this valuation leaves room for a re-rating if earnings stabilize. Valuation breakdown | Stock price advances toward the $45.12 price target as earnings stabilize and the valuation discount compresses over the next 12 months. | Tripped↓Deteriorating |
| CounterThree consecutive quarterly misses suggest the forward earnings estimate on which the multiple is based may itself be too high; if estimates are cut further, the apparent cheapness diminishes or disappears. | ||
Three of the last four quarterly reports produced EPS misses, with those three misses averaging approximately 12% below consensus; only the most recent quarter delivered a narrow 2.4% beat, and the durability of that reversal is unproven. Earnings | EPS surprise turns positive and exceeds 5% for 2 consecutive quarters, confirming the miss cycle has reversed. | →Stable |
| CounterThe most recent quarter delivered a beat of 2.35%, which may indicate analyst estimates have been adequately reset; if the new earnings baseline is conservative, subsequent quarters could outperform consistently. | ||
The options market put/call ratio of 1.40 indicates that bearish hedging significantly exceeds bullish positioning; this elevated defensive posture reflects market-wide concern about downside risk at a time when the earnings track record provides limited reassurance. Key risks | Put/call ratio declines below 0.70 as the earnings miss cycle ends and bearish hedging unwinds. | ↑Improving |
| CounterAn elevated put/call ratio can function as a contrarian indicator; if the underlying business stabilizes, the elevated put positioning may unwind rapidly and amplify any fundamental improvement in the stock price. | ||
Free cash flow stands at 179% of net income, meaning the business generates substantially more cash than accounting earnings alone imply; this strong cash conversion provides a balance-sheet cushion that partially offsets the weaker reported earnings trend.
→StableQuality breakdown
- Expectation
- Free cash flow remains above net income for the next 4 quarters, sustaining the superior conversion advantage.
CounterFree cash flow that exceeds net income by a wide margin can reflect favorable working capital timing rather than structurally superior cash generation; if payables or receivables normalize in coming quarters, the conversion ratio may compress toward or below 100%.
The stock trades at 10.1 times forward earnings with a PEG ratio of 1.13, a combination that screens as attractively valued within the specialty business services sector; this valuation leaves room for a re-rating if earnings stabilize.
Tripped↓DeterioratingValuation breakdown
- Expectation
- Stock price advances toward the $45.12 price target as earnings stabilize and the valuation discount compresses over the next 12 months.
CounterThree consecutive quarterly misses suggest the forward earnings estimate on which the multiple is based may itself be too high; if estimates are cut further, the apparent cheapness diminishes or disappears.
Three of the last four quarterly reports produced EPS misses, with those three misses averaging approximately 12% below consensus; only the most recent quarter delivered a narrow 2.4% beat, and the durability of that reversal is unproven.
→StableEarnings
- Expectation
- EPS surprise turns positive and exceeds 5% for 2 consecutive quarters, confirming the miss cycle has reversed.
CounterThe most recent quarter delivered a beat of 2.35%, which may indicate analyst estimates have been adequately reset; if the new earnings baseline is conservative, subsequent quarters could outperform consistently.
The options market put/call ratio of 1.40 indicates that bearish hedging significantly exceeds bullish positioning; this elevated defensive posture reflects market-wide concern about downside risk at a time when the earnings track record provides limited reassurance.
↑ImprovingKey risks
- Expectation
- Put/call ratio declines below 0.70 as the earnings miss cycle ends and bearish hedging unwinds.
CounterAn elevated put/call ratio can function as a contrarian indicator; if the underlying business stabilizes, the elevated put positioning may unwind rapidly and amplify any fundamental improvement in the stock price.
Per-dimension breakdown
Quality
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 2.5 |
| Gross margin | 0.0 |
| Op margin | 1.6 |
| Net margin | 0.9 |
| Current ratio | 5.4 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 179% FCF/NI
- ▸No competitive moat
Growth
4.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 3.8 |
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.6 |
| erm sentiment | 5.0 |
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $2,317,012 (0.083% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.5 |
| quality rank | 4.7 |
| growth rank | 5.9 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.8 |
| support resistance | 2.7 |
| 52w position | 9.2 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.0 |
| days to cover | 7.9 |
| volatility | 6.8 |
| beta | 8.8 |
| debt equity | 4.7 |
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 8.0 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend aristocrat: 2.4% yield
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:44d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.36
Upside
-3.4%
Downside
9.4%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.4=NEGATIVE outcome against Risk (lower is worse) at 7.0 and asymmetric R:R of -0.36.
The strongest dimensions are Risk (lower is worse) at 7.0, Value at 6.9, and Momentum at 6.6; the weakest are Catalyst at 3.6, Quality at 3.8, and Technical at 4.2. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.36 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Conversion
Trip ifFree cash flow falls below 100% of net income for 2 consecutive quarters, indicating the conversion advantage has deteriorated.
- P2Attractive Valuation At EntryTripped
Trip ifForward P/E expands above 15x, eliminating the valuation attractiveness at current earnings.
- P3Persistent Earnings Miss Pattern
Trip ifEPS surprise exceeds 5% for 2 consecutive quarters, demonstrating the miss cycle has definitively reversed.
- P4Elevated Put Call Sentiment Overhang
Trip ifPut/call ratio falls below 0.70 for 2 consecutive weeks, signaling bearish hedging has unwound to a neutral level.