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First Data (FDC) to Report Q2 Earnings: Is a Beat in Store?

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First Data Corporation is slated to report second-quarter 2018 results on Jul 30, before market open.

The top line should benefit from segmental strength, innovative product and services portfolio,expanding enterprise business and robust international presence. The bottom line is likely to be hurt by the normalization of adjusted effective tax rate and expenses related to buyouts and partnerships.

Year to date, First Data shares have gained 38.5%, outperforming the industry’s 3.7% rally.

 

Let’s check out the expectations in detail.

Segmental Growth, Product Portfolio to Boost Top Line

The Zacks Consensus Estimate for second-quarter revenues is pegged at $2.19 billion, indicating an 18.3% increase year over year. The top line is expected to benefit from growth across its three reportable segments — Global Business Solutions (GBS), Global Financial Solutions (GFS) and Network & Security Solutions (NSS).

Global Business Solutions’ revenues are expected to benefit from strong market presence across Latin America, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) regions. While higher revenues from EMEA and APAC are likely to boost Global Financial Solutions, lower revenues from North America and Latin America can partially offset the gain. Network & Security Solutions is likely to benefit from strength across Stored Value, Security and Fraud, and EFT units.

Infact, First Data looks strong on the back of its innovative product and services portfolio, expanding enterprise business and solid growth across its international presence. Partnerships have improved the company’s client base and are likely to boost the top-line growth. During first-quarter, First Data teamed up with RBL Bank. The partnership will allow RBL Bank to leverage First Data’s VisionPLUS for its credit card customers across India. Earlier this year, the company announced a similar kind of partnership with SBI Card. Further, acquisitions of CardConnect and BluePay are expected to perform well with First Data’s continuous investment in developing integrated solutions.

In first-quarter 2018, revenues increased 11% year over year on a reported basis, 10% on a comparable accounting basis and 5% on an organic constant-currency basis.

Bottom Line Expectations

The Zacks Consensus Estimate for earnings per share (EPS) in the to-be-reported quarter is pegged at 37 cents, indicating year-over-year decline of 7.5%. We believe normalization of adjusted effective tax rate and costs associated with acquisitions and agreements can weigh on the company’s earnings. However, improving operating results is likely to act as a tailwind.

In first-quarter 2018, adjusted earnings increased 3.6% to 29 cents per share.

Our Model Suggests a Beat

Per the Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

First Data has an Earnings ESP of +0.45% and a Zacks Rank #3, a combination that increases the odds of an earnings beat.

First Data Corporation Price and EPS Surprise

 

First Data Corporation Price and EPS Surprise | First Data Corporation Quote

Key Picks

Here are a few stocks from the broader Business Services sector that investors may consider, as our model shows that these also have the right combination of elements to beat on earnings in second-quarter 2018:

Avis Budget Group (CAR - Free Report) has an Earnings ESP of +5.17% and a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Aug 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiserv has an Earnings ESP of +0.94% and a Zacks Rank #3. The company is slated to report quarterly results on Jul 31.

Aptiv (APTV - Free Report) has an Earnings ESP of +0.02% and a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 31.

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