We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Business Services Stocks to Watch in a Prospering Industry
Read MoreHide Full Article
Economic strength, encouraging service activities and increased adoption and success of the work-from-home trend enable the Zacks Business - Services industry players to support the demand environment.
Driven by these positives, investors interested in the industry would do well to focus on stocks like Cintas Corporation (CTAS - Free Report) , APi Group Corporation (APG - Free Report) , and Bright Horizons Family Solutions Inc. (BFAM - Free Report) .
About the Industry
The Zacks Business-Services industry comprises companies that offer a range of services, including specialty rental, supply-chain management, electronic commerce, technology, document management, digital audience, data, voice, analytical, and business transformation, among others. The pandemic has changed the way industry players conduct business and deliver services. The industry’s key focus is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and enhanced cybersecurity. To position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic recovery will bring, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand.
What's Shaping the Future of the Business Services Industry?
Strong Service Activities: The sector is a major beneficiary of service activities.Economic activity in the services sector expanded for the 10th consecutive month in April, with the Services PMI measured by the Institute for Supply Management remaining robust, staying above the 50% threshold for the 56th time in 59 months, indicating sustained expansion since the post-pandemic recovery.
Demand Stability: The industry is mature, with demand for services remaining stable for some time now. Revenues, income, and cash flows are now above pre-pandemic levels, enabling most industry players to pay out stable dividends.
AI Advancement: The rapid advancement and adoption of artificial intelligence and automation technologies are reshaping how business services are delivered. While these innovations promise enhanced efficiency, cost reduction, and faster turnaround times, they also pose challenges such as workforce displacement and the need for constant upskilling. Companies that effectively integrate AI while managing the human impact will likely lead the future of the industry.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #51, which places it in the top 21% of 246 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
The Zacks Business Services industry has outperformed the broader sector and the S&P 500 in the past 12-month period.
The industry has risen 13% compared with the S&P 500 composite’s growth of 10%. The broader sector has also returned 10% over the same time frame.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 27.35X compared with the S&P 500’s 20.65X and the sector’s 22.33X.
Over the past five years, the industry has traded as high as 53.98X and as low as 10.21X, with the median being 22.43X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Service Stocks in Focus
We have presented three stocks that are well-positioned to grow in the near term.
Bright Horizons: The company’s first-quarter fiscal 2025 results highlight a strong start to the year, with 7% revenue growth and over 50% adjusted EPS growth, reflecting the strength of its diversified service portfolio. Despite macroeconomic uncertainty, the company’s resilient business model and high-performing team continue to deliver solid execution.
Management’s ongoing commitment to quality service and operational excellence positions Cintas well for sustained performance. As the company looks to deepen its impact across clients and communities, its strategic focus on reliable service delivery and customer-centric care further enhances its long-term growth potential and reinforces its leadership within the business services industry.
The Zacks Consensus Estimate for 2025 EPS has remained unchanged at $4.06 in the past 60 days. BFAM shares have soared 8% in the past year.
Price and Consensus: BFAM
APi Group: APi Group had a confident and disciplined start to 2025, with a return to traditional levels of organic growth following a deliberate pruning of lower-value customer accounts in 2024. This strategic focus has enabled the company to enhance margin performance while pursuing M&A activity and share repurchases.
The company's strong backlog, adaptable cost structure, and exposure to statutorily mandated service demand across diverse global end markets provide a resilient foundation. These factors act as a protective moat, helping APi Group withstand macroeconomic headwinds such as shifting tariff conditions. With a clear focus on achieving its “13/60/80” performance targets and unveiling higher long-term goals at its upcoming investor day, APi is poised for sustained, value-driven growth.
APG currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2025 bottom line has increased 3% to $2.05 in the past 60 days. APG shares have gained 16% in the past year.
Price and Consensus: APG
Cintas: Cintas is benefiting from the execution of its employee-partners and the distinctive value it delivers across essential business needs such as image, safety, cleanliness, and regulatory compliance. The company’s strong culture and commitment to excellence have built a foundation of trust with customers and stakeholders alike. Looking ahead, Cintas is well-positioned to sustain its momentum through its superior products, dependable service offerings, and a deeply engaged workforce.
This cohesive strategy not only reinforces customer loyalty but also strengthens long-term shareholder value. As businesses increasingly prioritize workplace standards and compliance, Cintas’s comprehensive solutions and unique operating model are expected to drive continued growth and industry leadership in the evolving business services landscape.
CTAS also carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2025 EPS has increased 1.6% to $4.38 in the past 60 days. The stock gained 25% in the past year.
Price and Consensus: CTAS
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Business Services Stocks to Watch in a Prospering Industry
Economic strength, encouraging service activities and increased adoption and success of the work-from-home trend enable the Zacks Business - Services industry players to support the demand environment.
Driven by these positives, investors interested in the industry would do well to focus on stocks like Cintas Corporation (CTAS - Free Report) , APi Group Corporation (APG - Free Report) , and Bright Horizons Family Solutions Inc. (BFAM - Free Report) .
About the Industry
The Zacks Business-Services industry comprises companies that offer a range of services, including specialty rental, supply-chain management, electronic commerce, technology, document management, digital audience, data, voice, analytical, and business transformation, among others. The pandemic has changed the way industry players conduct business and deliver services. The industry’s key focus is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and enhanced cybersecurity. To position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic recovery will bring, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand.
What's Shaping the Future of the Business Services Industry?
Strong Service Activities: The sector is a major beneficiary of service activities.Economic activity in the services sector expanded for the 10th consecutive month in April, with the Services PMI measured by the Institute for Supply Management remaining robust, staying above the 50% threshold for the 56th time in 59 months, indicating sustained expansion since the post-pandemic recovery.
Demand Stability: The industry is mature, with demand for services remaining stable for some time now. Revenues, income, and cash flows are now above pre-pandemic levels, enabling most industry players to pay out stable dividends.
AI Advancement: The rapid advancement and adoption of artificial intelligence and automation technologies are reshaping how business services are delivered. While these innovations promise enhanced efficiency, cost reduction, and faster turnaround times, they also pose challenges such as workforce displacement and the need for constant upskilling. Companies that effectively integrate AI while managing the human impact will likely lead the future of the industry.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #51, which places it in the top 21% of 246 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
The Zacks Business Services industry has outperformed the broader sector and the S&P 500 in the past 12-month period.
The industry has risen 13% compared with the S&P 500 composite’s growth of 10%. The broader sector has also returned 10% over the same time frame.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 27.35X compared with the S&P 500’s 20.65X and the sector’s 22.33X.
Over the past five years, the industry has traded as high as 53.98X and as low as 10.21X, with the median being 22.43X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Service Stocks in Focus
We have presented three stocks that are well-positioned to grow in the near term.
Bright Horizons: The company’s first-quarter fiscal 2025 results highlight a strong start to the year, with 7% revenue growth and over 50% adjusted EPS growth, reflecting the strength of its diversified service portfolio. Despite macroeconomic uncertainty, the company’s resilient business model and high-performing team continue to deliver solid execution.
Management’s ongoing commitment to quality service and operational excellence positions Cintas well for sustained performance. As the company looks to deepen its impact across clients and communities, its strategic focus on reliable service delivery and customer-centric care further enhances its long-term growth potential and reinforces its leadership within the business services industry.
The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for 2025 EPS has remained unchanged at $4.06 in the past 60 days. BFAM shares have soared 8% in the past year.
Price and Consensus: BFAM
APi Group: APi Group had a confident and disciplined start to 2025, with a return to traditional levels of organic growth following a deliberate pruning of lower-value customer accounts in 2024. This strategic focus has enabled the company to enhance margin performance while pursuing M&A activity and share repurchases.
The company's strong backlog, adaptable cost structure, and exposure to statutorily mandated service demand across diverse global end markets provide a resilient foundation. These factors act as a protective moat, helping APi Group withstand macroeconomic headwinds such as shifting tariff conditions. With a clear focus on achieving its “13/60/80” performance targets and unveiling higher long-term goals at its upcoming investor day, APi is poised for sustained, value-driven growth.
APG currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2025 bottom line has increased 3% to $2.05 in the past 60 days. APG shares have gained 16% in the past year.
Price and Consensus: APG
Cintas: Cintas is benefiting from the execution of its employee-partners and the distinctive value it delivers across essential business needs such as image, safety, cleanliness, and regulatory compliance. The company’s strong culture and commitment to excellence have built a foundation of trust with customers and stakeholders alike. Looking ahead, Cintas is well-positioned to sustain its momentum through its superior products, dependable service offerings, and a deeply engaged workforce.
This cohesive strategy not only reinforces customer loyalty but also strengthens long-term shareholder value. As businesses increasingly prioritize workplace standards and compliance, Cintas’s comprehensive solutions and unique operating model are expected to drive continued growth and industry leadership in the evolving business services landscape.
CTAS also carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2025 EPS has increased 1.6% to $4.38 in the past 60 days. The stock gained 25% in the past year.
Price and Consensus: CTAS