Value
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.4 |
| P/S | 10.0 |
| EV/EBITDA | 5.8 |
| Fwd P/E | 9.3 |
| PEG | 6.5 |
| Analyst target | 5.0 |
- ▸Forward P/E: 10.2x
- ▸PEG: 1.13
- ▸Attractively valued
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 score4.9/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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.
→StableValuation 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.
→StableKey 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.
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.
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
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.7 |
| MACD | 2.0 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 38) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.7 |
| Price target | 7.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (7.0) — signal dampened
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $2,317,012 (0.089% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.5 |
| quality rank | 4.7 |
| growth rank | 5.5 |
Technical
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.2 |
| support resistance | 3.2 |
| 52w position | 7.3 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.8 |
| days to cover | 6.7 |
| volatility | 5.7 |
| put call | 10.0 |
| implied vol | 5.0 |
| beta | 8.8 |
| debt equity | 4.7 |
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 6.5 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 262.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:61d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.7<4.5
- ASYMMETRY:0.3<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
0.26
Upside
+3.0%
Downside
11.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.6B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.3 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.7<4.5.
The strongest dimensions are Value at 7.3, Risk (lower is worse) at 6.8, and Sentiment at 6.5; the weakest are Catalyst at 3.3, Momentum at 3.7, and Quality at 3.8. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.26 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 Entry
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.