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What to Expect from First Data (FDC) This Earnings Season?

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First Data Corporation is set to report third-quarter 2017 results on Oct 30.

The company has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

We don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement.

First Data’s earnings surprise history has been impressive as the company beat estimates in three of the last four quarters with an average positive surprise of 3.77%.

We observe that First Data shares have rallied 32.4% year to date, underperforming its industry’s gain of 15.3%.

 

Q2 Highlights

In the second quarter, the company reported earnings of 40 cents, which were in line with the Zacks Consensus Estimate. Earnings increased 14.3% from the year-ago quarter.

Consolidated revenues that include transaction and processing fees, product sales, reimbursable debit network fees, postage and other were $3.0 billion, up 3% year over year and 4% on a constant currency basis.

What Are We Watching in Q3?

First Data continues to expand its enterprise business. The company differentiates itself in this space by consistently offering new features and solutions to existing clients and making continuous efforts to expand its client base. It continues to maintain its leading position in the bank acquiring channel through strategic partnerships.

First Data Corporation Price and EPS Surprise

First Data is improving on its SMB direct business, which is expected to boost the company’s GBS North American business. The company has been improving on both merchant and sales force attrition.

First Data completed the acquisition of peer payment processor and its longtime distribution partner, CardConnect Corp in the third quarter. Modest contribution to First Data’s adjusted earnings per share (EPS) is expected from this acquisition in the third quarter.

The company closed Acculynk acquisition early in the second quarter and it has already started contributing. The company sold Acculynk debit solutions through several enterprise clients including Alphabet’s (GOOGL - Free Report) Google, Priceline , Alibaba’s (BABA - Free Report) Alipay, Green Dot and Western Union.

Conclusion

Overall, we believe First Data’s focus on globalizing its offerings, cost management, strategic partnerships, along with its healthy business around large and small banks will drive growth going forward.

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