The Business Services sector covers an array of services including marketing, consulting, staffing, security, telecommunications, Internet services, logistics and waste handling. Thus, the outlook of the business services sector is firmly tied to the broader economy.
Notably, Trump administration’s business-friendly approach, reduced tax rates, a strong U.S. economy, robust manufacturing activity and improvements in the labor market are currently major positives for the sector.
As of Apr 25, 30.8% S&P 500 companies belonging to the Business Services sector reported their respective Q1 numbers. According to our latest Earnings Outlook, first-quarter 2018 total earnings for these companies increased 21.9% from the same period last year on 6.6% higher revenues. The report also states that 75% surpassed revenue estimates and 100% outperformed on the bottom line front.
Overall, we already have results from 154 S&P 500 members (accounting for 37.9% of the index’s total market capitalization). Total earnings for these companies increased 25.4% from the same period last year on 10.3% higher revenues, with 80.5% beating EPS estimates and 72.1% beating revenue estimates.
Bullish View
Per the above report, stocks in the Business Services sector are expected to record top-and bottom line growth of 4.7% and 11.6%, respectively. Notably, the sector is one of the 12 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth.
The report predicts that total first-quarter 2018 earnings are expected to be up 20% on 8% higher revenues.
For full-year 2018, total earnings for the S&P 500 index are expected to be up 18.3% on 5.4% higher revenues. For 2019, earnings are expected to be up 9.3% on 4.3% higher revenues.
Business Services Stocks’ Earnings to Watch Out For
Given this bullish backdrop, investors interested in the business services stocks can watch out for four companies that are scheduled to report their first-quarter 2018 numbers on Apr 30.
Based in Georgia, First Data Corporation is a commerce-enabling technology and solutions company. The company carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $1,904 million, reflecting year-over-year growth of 10.4%. Earnings per share estimates are pegged at 26 cents, indicating year-over-year decline of 7.1%.
First Data’s earnings surpassed the Zacks Consensus Estimate in only one of the previous four quarters, resulting in an average positive surprise of 0.9%. Currently, the company has an Earnings ESP of -3.58%. However, when we issued our earnings preview article earlier, the Earnings ESP was -2.89%.
Based in Texas, Insperity, Inc. (NSP - Free Report) is an integrated human resources and business solutions provider. Currently, it carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $988.29 million, reflecting year-over-year growth of 11.9%. The estimate for earnings per share is pegged at $1.14, indicating growth of 23.9% from the year-ago quarter.
Insperity has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, delivering an average beat of 14.4%. The company has an Earnings ESP of 0.00%.
Based in California, TriNet Group, Inc. (TNET - Free Report) is a provider of a comprehensive human resources solution for small to medium-sized businesses. The company carries a Zacks Rank #1.
The Zacks Consensus Estimate for first-quarter 2018 revenues and earnings is pegged at $216.25 million and 63 cents per share, indicating year-over-year growth of 8.7% and 40%, respectively.
Moreover, the company has an attractive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 63.8%. Additionally, the company has an Earnings ESP of +1.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Based in Washington, TrueBlue, Inc. (TBI - Free Report) is one of the leading providers of specialized workforce solutions. The company carries a Zacks Rank #3.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $564.49 million, reflecting year-over-year decline of 0.7%. The estimate for earnings per share is pegged at 21 cents, which remains flat with the year-ago quarter.
TrueBlue has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the previous four quarters, resulting in an average positive surprise of 21.7%. The company has an Earnings ESP of 0.00%.
What Does the Zacks Model Predict?
According to the Zacks model, a company with a Zacks Rank #1, 2 or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. We also don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.
Irrespective of an earnings beat or miss, investors are likely to focus on the companies’ fundamentals to make investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
The Business Services sector covers an array of services including marketing, consulting, staffing, security, telecommunications, Internet services, logistics and waste handling. Thus, the outlook of the business services sector is firmly tied to the broader economy.
Notably, Trump administration’s business-friendly approach, reduced tax rates, a strong U.S. economy, robust manufacturing activity and improvements in the labor market are currently major positives for the sector.
As of Apr 25, 30.8% S&P 500 companies belonging to the Business Services sector reported their respective Q1 numbers. According to our latest Earnings Outlook, first-quarter 2018 total earnings for these companies increased 21.9% from the same period last year on 6.6% higher revenues. The report also states that 75% surpassed revenue estimates and 100% outperformed on the bottom line front.
Overall, we already have results from 154 S&P 500 members (accounting for 37.9% of the index’s total market capitalization). Total earnings for these companies increased 25.4% from the same period last year on 10.3% higher revenues, with 80.5% beating EPS estimates and 72.1% beating revenue estimates.
Bullish View
Per the above report, stocks in the Business Services sector are expected to record top-and bottom line growth of 4.7% and 11.6%, respectively. Notably, the sector is one of the 12 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth.
The report predicts that total first-quarter 2018 earnings are expected to be up 20% on 8% higher revenues.
For full-year 2018, total earnings for the S&P 500 index are expected to be up 18.3% on 5.4% higher revenues. For 2019, earnings are expected to be up 9.3% on 4.3% higher revenues.
Business Services Stocks’ Earnings to Watch Out For
Given this bullish backdrop, investors interested in the business services stocks can watch out for four companies that are scheduled to report their first-quarter 2018 numbers on Apr 30.
Based in Georgia, First Data Corporation is a commerce-enabling technology and solutions company. The company carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $1,904 million, reflecting year-over-year growth of 10.4%. Earnings per share estimates are pegged at 26 cents, indicating year-over-year decline of 7.1%.
First Data’s earnings surpassed the Zacks Consensus Estimate in only one of the previous four quarters, resulting in an average positive surprise of 0.9%. Currently, the company has an Earnings ESP of -3.58%. However, when we issued our earnings preview article earlier, the Earnings ESP was -2.89%.
Based in Texas, Insperity, Inc. (NSP - Free Report) is an integrated human resources and business solutions provider. Currently, it carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $988.29 million, reflecting year-over-year growth of 11.9%. The estimate for earnings per share is pegged at $1.14, indicating growth of 23.9% from the year-ago quarter.
Insperity has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, delivering an average beat of 14.4%. The company has an Earnings ESP of 0.00%.
Based in California, TriNet Group, Inc. (TNET - Free Report) is a provider of a comprehensive human resources solution for small to medium-sized businesses. The company carries a Zacks Rank #1.
The Zacks Consensus Estimate for first-quarter 2018 revenues and earnings is pegged at $216.25 million and 63 cents per share, indicating year-over-year growth of 8.7% and 40%, respectively.
Moreover, the company has an attractive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 63.8%. Additionally, the company has an Earnings ESP of +1.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Based in Washington, TrueBlue, Inc. (TBI - Free Report) is one of the leading providers of specialized workforce solutions. The company carries a Zacks Rank #3.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter stands at $564.49 million, reflecting year-over-year decline of 0.7%. The estimate for earnings per share is pegged at 21 cents, which remains flat with the year-ago quarter.
TrueBlue has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the previous four quarters, resulting in an average positive surprise of 21.7%. The company has an Earnings ESP of 0.00%.
What Does the Zacks Model Predict?
According to the Zacks model, a company with a Zacks Rank #1, 2 or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. We also don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.
Irrespective of an earnings beat or miss, investors are likely to focus on the companies’ fundamentals to make investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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