What Happened?
Shares of facility services provider ABM Industries (NYSE:ABM) fell 9.3% in the morning session after 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.
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.
What The Market Is Telling Us
ABM’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
ABM is down 8% since the beginning of the year, and at $47.03 per share, it is trading 19.8% 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 $1,946.
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