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Total System (TSS) to Report Q4 Earnings: What's in Store?
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Total System Services, Inc. is scheduled to report fourth-quarter and full-year 2016 results on Jan 24, after market close.
The company’s third-quarter 2016 operating earnings per share (EPS) missed the Zacks Consensus Estimate. Results were affected by higher expenses, partially offset by higher revenues.
Notably, the company recorded a positive earnings surprise in two of the trailing four quarters.
Total System Services, Inc. Price and EPS Surprise
Our quantitative model doesn’t call for an earnings beat this time around. Here is why:
A stock needs to have the right combination of the two key criteria – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) – for increasing chances of an earnings beat. Unfortunately, this is not the case here, as elaborated below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Total System is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 65 cents.
Zacks Rank: Total System’s Zacks Rank #4 (Sell) further lowers the predictive power of ESP. We caution investors against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement.
What to Expect?
Total System’s quarterly result should continue to benefit from its long-term processing contracts as it remains focused on retaining and acquiring clients.
Results should reflect continued revenue and transaction growth with increased accounts on file from the company’s international business. Also, North America segment should see higher revenues from the cross-sell of products and services.
During the third-quarter earnings conference, management noted that deleveraging of balance sheet is ahead of the projected period, with $175 million of debt pay-down during the third quarter, taking the two-quarter total of deleveraging to $300 million. Management stated that it plans to reduce leverage by $800 million over eight quarters. Hence, fourth-quarter 2016 should be no different.
Total System adjusted its financial guidance for full-year 2016. The company reiterated its adjusted EPS attributable to the company’s common shareholders from continuing operations in the range of $2.78–$2.85. However, the company no longer expects the low end of the range as previously guided.
In order to account for currency impact, the company reduced its net revenue guidance for the current year to $3.03–$3.05 billion (21–22% growth) from the previous range of $3.04–$3.10 billion (22–24%).
Revenue growth for North America business continues to be at or slightly above 5% for the year.
Free cash flow is expected in the range of $550–$570 million for the year, higher than the previous outlook of $510 million to $540 million range.
Total System’s activities during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 65 cents over the last seven days. The estimate, however reflect a year-over-year increase of 23%.
Stocks That Warrant a Look
Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Nasdaq, Inc. (NDAQ - Free Report) is scheduled to release results on Jan 31. It has an Earnings ESP of +1.06% and carries a Zacks Rank #3.
CBOE Holdings, Inc. (CBOE - Free Report) has an Earnings ESP of +3.45% and sports a Zacks Rank #1. The company is slated to release results on Feb 6.
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Total System (TSS) to Report Q4 Earnings: What's in Store?
Total System Services, Inc. is scheduled to report fourth-quarter and full-year 2016 results on Jan 24, after market close.
The company’s third-quarter 2016 operating earnings per share (EPS) missed the Zacks Consensus Estimate. Results were affected by higher expenses, partially offset by higher revenues.
Notably, the company recorded a positive earnings surprise in two of the trailing four quarters.
Total System Services, Inc. Price and EPS Surprise
Total System Services, Inc. Price and EPS Surprise | Total System Services, Inc. Quote
Earnings Whispers
Our quantitative model doesn’t call for an earnings beat this time around. Here is why:
A stock needs to have the right combination of the two key criteria – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) – for increasing chances of an earnings beat. Unfortunately, this is not the case here, as elaborated below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Total System is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 65 cents.
Zacks Rank: Total System’s Zacks Rank #4 (Sell) further lowers the predictive power of ESP. We caution investors against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement.
What to Expect?
Total System’s quarterly result should continue to benefit from its long-term processing contracts as it remains focused on retaining and acquiring clients.
Results should reflect continued revenue and transaction growth with increased accounts on file from the company’s international business. Also, North America segment should see higher revenues from the cross-sell of products and services.
During the third-quarter earnings conference, management noted that deleveraging of balance sheet is ahead of the projected period, with $175 million of debt pay-down during the third quarter, taking the two-quarter total of deleveraging to $300 million. Management stated that it plans to reduce leverage by $800 million over eight quarters. Hence, fourth-quarter 2016 should be no different.
Total System adjusted its financial guidance for full-year 2016. The company reiterated its adjusted EPS attributable to the company’s common shareholders from continuing operations in the range of $2.78–$2.85. However, the company no longer expects the low end of the range as previously guided.
In order to account for currency impact, the company reduced its net revenue guidance for the current year to $3.03–$3.05 billion (21–22% growth) from the previous range of $3.04–$3.10 billion (22–24%).
Revenue growth for North America business continues to be at or slightly above 5% for the year.
Free cash flow is expected in the range of $550–$570 million for the year, higher than the previous outlook of $510 million to $540 million range.
Total System’s activities during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 65 cents over the last seven days. The estimate, however reflect a year-over-year increase of 23%.
Stocks That Warrant a Look
Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Nasdaq, Inc. (NDAQ - Free Report) is scheduled to release results on Jan 31. It has an Earnings ESP of +1.06% and carries a Zacks Rank #3.
CME Group Inc. (CME - Free Report) is slated to release results on Feb 2. It has an Earnings ESP of +1.85% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CBOE Holdings, Inc. (CBOE - Free Report) has an Earnings ESP of +3.45% and sports a Zacks Rank #1. The company is slated to release results on Feb 6.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>