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Top 5 Business Services Stocks Poised to Beat on Q3 Earnings
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We are in the middle of the third-quarter 2021 earnings season that has delivered encouraging results so far. This week is the busiest of this season as more than 1,500 companies are slated to release their financial numbers. Market participants have high expectations from this reporting cycle as overall earnings of corporate America are likely to remain robust after skyrocketing in the second quarter.
Meanwhile, five business services companies with a favorable Zacks Rank are expected to beat on earnings results within the next week. Investment in these stocks should be fruitful going forward.
Robust Third-Quarter Earnings So Far
As of Oct 29, 279 S&P 500 companies reported third-quarter results. Total earnings of these companies are up 39.2% year over year on 17.8% higher revenues with 82.1% beating EPS estimates and 73.5% surpassing revenue estimates.
At present, total third-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to jump 37.6% from the same period last year on 14.9% higher revenues. This suggests a steady improvement from 26.1% earnings growth on 14% higher revenues, estimated at the beginning of the reporting cycle.
Earnings results of the first two quarters of this year were favorably impacted since the corresponding quarters of last year were affected by the pandemic-led lockdowns and restrictions. This was evident from 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
Nevertheless, the U.S. economy started reopening partially albeit at a languid pace since the third quarter of 2020. Notwithstanding favorable comparisons with last year, third-quarter 2021 earnings estimates reflect genuine growth, climbing more than 23% from the pre-pandemic third-quarter of 2019.
Performance of Business Services Sector
Business services had a good third-quarter buoyed by the faster-than-expected reopening of the U.S. economy. Businesses expanded their operations and hired more manpower despite facing prolonged supply-chain disruptions and a shortage of skilled labor.
As of Oct 29, 43 business services companies reported earnings results. Of this, 34 surpassed the Zacks Consensus estimate for earnings. One company reported in-line results, while the remaining eight missed the consensus mark.
Our Top Picks
We have narrowed down our search to five business services stocks that will report earnings results within the next week. Each of our picks carries either a Zacks Rank#1 (Strong Buy) or 2 (Buy) and a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Image Source: Zacks Investment Research
Coursera Inc. (COUR - Free Report) is an online learning platform. It partners with universities and other educational organizations to offer a broad catalog of content and credentials, including Guided Projects, courses, Specializations, certificates and bachelor's and master's degrees.
This Zacks Rank #2 company has an Earnings ESP of +9.43%. The Zacks Consensus Estimate for current-year earnings improved 1.9% over the last 30 days. It recorded earnings surprises in two out of the last four reported quarters, with an average beat of 31.6%. The company is set to release earnings results on Nov 2, after the closing bell.
Vontier Corp. (VNT - Free Report) is focused on transportation and mobility solutions. The company's portfolio of brands includes expertise in mobility technologies, retail and commercial fueling, fleet management, telematics, vehicle diagnostics and repair, and smart cities end-markets.
This Zacks Rank #1 company has an Earnings ESP of +1.33%. It has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.4% over the last 30 days.
It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 12.6%. The company is set to release earnings results on Nov 4, before the opening bell.
Rocket Companies Inc. (RKT - Free Report) is engaged in the tech-driven real estate, mortgage, and eCommerce businesses in the United States and Canada. It operates in two segments, Direct to Consumer and Partner Network.
The company provides personal finance and consumer service brands including Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Amrock, Core Digital Media, Rock Connections, Lendesk and Edison Financial.
This Zacks Rank #2 company has an Earnings ESP of +0.14%. The Zacks Consensus Estimate for current-year earnings improved 18.6% over the last 30 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 13.2%. The company is set to release earnings results on Nov 4, after the closing bell.
Black Knight Inc. is engaged in providing integrated technology, workflow automation and data and analytics to the mortgage and real estate industries, through its subsidiaries. It operates through the Technology and Data, and Analytics business segments.
This Zacks Rank #2 company has an Earnings ESP of +1.98%. It has an expected earnings growth rate of 7.1% for the current year. It recorded earnings surprises in the last four reported quarters, with an average beat of 6.6%. The company is set to release earnings results on Nov 8, before the opening bell.
Opendoor Technologies Inc. (OPEN - Free Report) provides a digital platform for residential real estates. Its platform enables consumers to buy and sell a home online. The company develops a service model for real estate buying and selling on a mobile device.
This Zacks Rank #2 company has an Earnings ESP of +38.89%. It has an expected earnings growth rate of 32.5% for the current year. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 34.3%. The company is set to release earnings results on Nov 10, after the closing bell.
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Top 5 Business Services Stocks Poised to Beat on Q3 Earnings
We are in the middle of the third-quarter 2021 earnings season that has delivered encouraging results so far. This week is the busiest of this season as more than 1,500 companies are slated to release their financial numbers. Market participants have high expectations from this reporting cycle as overall earnings of corporate America are likely to remain robust after skyrocketing in the second quarter.
Meanwhile, five business services companies with a favorable Zacks Rank are expected to beat on earnings results within the next week. Investment in these stocks should be fruitful going forward.
Robust Third-Quarter Earnings So Far
As of Oct 29, 279 S&P 500 companies reported third-quarter results. Total earnings of these companies are up 39.2% year over year on 17.8% higher revenues with 82.1% beating EPS estimates and 73.5% surpassing revenue estimates.
At present, total third-quarter earnings of the market's benchmark — the S&P 500 Index — are projected to jump 37.6% from the same period last year on 14.9% higher revenues. This suggests a steady improvement from 26.1% earnings growth on 14% higher revenues, estimated at the beginning of the reporting cycle.
Earnings results of the first two quarters of this year were favorably impacted since the corresponding quarters of last year were affected by the pandemic-led lockdowns and restrictions. This was evident from 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
Nevertheless, the U.S. economy started reopening partially albeit at a languid pace since the third quarter of 2020. Notwithstanding favorable comparisons with last year, third-quarter 2021 earnings estimates reflect genuine growth, climbing more than 23% from the pre-pandemic third-quarter of 2019.
Performance of Business Services Sector
Business services had a good third-quarter buoyed by the faster-than-expected reopening of the U.S. economy. Businesses expanded their operations and hired more manpower despite facing prolonged supply-chain disruptions and a shortage of skilled labor.
As of Oct 29, 43 business services companies reported earnings results. Of this, 34 surpassed the Zacks Consensus estimate for earnings. One company reported in-line results, while the remaining eight missed the consensus mark.
Our Top Picks
We have narrowed down our search to five business services stocks that will report earnings results within the next week. Each of our picks carries either a Zacks Rank#1 (Strong Buy) or 2 (Buy) and a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Coursera Inc. (COUR - Free Report) is an online learning platform. It partners with universities and other educational organizations to offer a broad catalog of content and credentials, including Guided Projects, courses, Specializations, certificates and bachelor's and master's degrees.
This Zacks Rank #2 company has an Earnings ESP of +9.43%. The Zacks Consensus Estimate for current-year earnings improved 1.9% over the last 30 days. It recorded earnings surprises in two out of the last four reported quarters, with an average beat of 31.6%. The company is set to release earnings results on Nov 2, after the closing bell.
Vontier Corp. (VNT - Free Report) is focused on transportation and mobility solutions. The company's portfolio of brands includes expertise in mobility technologies, retail and commercial fueling, fleet management, telematics, vehicle diagnostics and repair, and smart cities end-markets.
This Zacks Rank #1 company has an Earnings ESP of +1.33%. It has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings improved 1.4% over the last 30 days.
It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 12.6%. The company is set to release earnings results on Nov 4, before the opening bell.
Rocket Companies Inc. (RKT - Free Report) is engaged in the tech-driven real estate, mortgage, and eCommerce businesses in the United States and Canada. It operates in two segments, Direct to Consumer and Partner Network.
The company provides personal finance and consumer service brands including Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Amrock, Core Digital Media, Rock Connections, Lendesk and Edison Financial.
This Zacks Rank #2 company has an Earnings ESP of +0.14%. The Zacks Consensus Estimate for current-year earnings improved 18.6% over the last 30 days. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 13.2%. The company is set to release earnings results on Nov 4, after the closing bell.
Black Knight Inc. is engaged in providing integrated technology, workflow automation and data and analytics to the mortgage and real estate industries, through its subsidiaries. It operates through the Technology and Data, and Analytics business segments.
This Zacks Rank #2 company has an Earnings ESP of +1.98%. It has an expected earnings growth rate of 7.1% for the current year. It recorded earnings surprises in the last four reported quarters, with an average beat of 6.6%. The company is set to release earnings results on Nov 8, before the opening bell.
Opendoor Technologies Inc. (OPEN - Free Report) provides a digital platform for residential real estates. Its platform enables consumers to buy and sell a home online. The company develops a service model for real estate buying and selling on a mobile device.
This Zacks Rank #2 company has an Earnings ESP of +38.89%. It has an expected earnings growth rate of 32.5% for the current year. It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 34.3%. The company is set to release earnings results on Nov 10, after the closing bell.