ABM, operating in an industry characterized by razor-thin profit margins and intense competitive pressures, has managed to maintain a strong performance despite the challenging employment landscape in the United States. In the current quarter, the company reported revenue stagnation or even slight declines across all segments, a concerning development amid a period of elevated inflation. However, it's worth noting that the aviation segment bucked this trend due to seasonal effects.
 
This industry, lacking in organic growth prospects, relies heavily on acquisitions as the primary means of gaining market share and expanding business volumes. ABM has adeptly executed an external growth strategy, resulting in a remarkable achievement of doubling its sales and profits over the past decade. Nevertheless, the profitability of these acquisitions has been notably low.
 
ABM's valuation in the market has suffered, mirroring a historically low operating profit multiple, which closely aligns with the multiple the company uses to value its own acquisitions (0.5 times sales). Interestingly, management appears to perceive this valuation as unjust, as evidenced by their recent decision to reinvigorate their share buyback program, originally launched last year. This move suggests their belief in the company's intrinsic value and their commitment to creating shareholder value despite market perceptions.