What happened
Shares of ServiceMaster Global Holdings (SERV +0.00%) soared 10.8% on Thursday, defying the broader market's more than 4% plunge, after the pest-control leader released strong fourth-quarter 2019 results.
So what
Quarterly revenue grew 11% year over year to $507 million, translating to a 12% increase in adjusted net income to $30 million, or $0.22 per share. Analysts on average were only expecting earnings of $0.19 per share on revenue of $506.6 million.
Image source: Getty Images.
"Both the Terminix and ServiceMaster Brands segments delivered strong progress against our 2019 strategic initiatives," interim CEO Naren Gursahaney said. "As we announced in January, we are conducting a strategic review of our ServiceMaster Brands business, including a possible sale of the business."
Now what
For the full year of 2020, ServiceMaster now expects revenue from continuing operations of $1.98 billion to $2 billion (which excludes the ServiceMaster Brands), good for growth between 9% and 10% from 2019 and above the estimates for an increase of closer to 7.5%. That range assumes roughly $60 million in revenue from Terminix acquisitions closed before today, organic revenue growth of 3% to 4%, and roughly $75 million in sales from European pest operations.
In the end, between ServiceMaster's solid end to 2019, its value-generating efforts to potentially divest its namesake brands, and that encouraging outlook, bullish investors had every reason to bid up this consumer discretionary stock in response.
