Why ABM Industries Stock Popped 17%

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What happened

ABM Industries (NYSE: ABM) scored its third "earnings beat" in a row this morning, sending shares of the cleaning contractor flying up 17.2% as of 11:50 a.m. EST.

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ABM reported a $0.58 per share "adjusted" profit for fiscal Q4 2018, beating analyst predictions of $0.56 pro forma, on sales of $1.65 billion.

So what

Granted, ABM's GAAP profit was only $0.15 per share, but even this was better than the GAAP loss the company had reported in the year-ago quarter. Quarterly sales grew 10% year over year.

If there was a dark cloud around this silver lining, it was the fact that even as ABM exceeded expectations, Q4 marked a distinct slowdown in the pace of business growth this year. For all of 2018, sales grew 18% (or nearly twice as fast as the growth rate recorded in Q4).

That being said, a win is a win, and with earnings for all of 2018 coming in at $1.47 per diluted share (up from just $0.07 last year), 2018 as a whole was definitely a winning year for ABM.

Now what

It looks like 2019 could be even better. Issuing new guidance for the new fiscal year, ABM predicted that in fiscal 2019, it will earn between $1.65 and $1.80 per share, GAAP. Taken at the midpoint of that range, ABM's promised $1.72 per share in GAAP profit will represent 17% year-over-year profit growth -- not quite as good as the 2,000% income growth we saw in 2018, but good enough to send ABM stock up 17% today.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.