Business Services witnessed improved demand environment in the third quarter, thanks to gradual re-opening of the economy and resumption of business operations, after the coronavirus mayhem took a toll on the space during the period of strict restrictions.
Both manufacturing and non-manufacturing activities revived from bleak levels during the July-September period. Economic activity in the service sector expanded 0.9% from August to September as the Services PMI measured by ISM touched 57.8%. This is the fifth consecutive month of expansion after April’s contraction that had interrupted an impressive growth rally of 131 consecutive months.
Although manufacturing activities edged down 0.6% from August to September, with the Purchasing Managers Index (PMI) measured by Institute for Supply Management (ISM) touching 55.4%, the reading stayed well above 50 — highlighting growth in the manufacturing sector. This is the fourth consecutive month of expansion after a two-month period of contraction that followed 122 straight months of expansion.
Manufacturing and service strength, coupled with rising demand for expertise to improve operational efficiency and reduce costs, helped many business services companies sail through the testing times during the third quarter and deliver better-than-expected results.
This season, we saw impressive quarterly results from major business services companies such as
Aptiv ( APTV Quick Quote APTV - Free Report) , Omnicom ( OMC Quick Quote OMC - Free Report) , Rollins ( ROL Quick Quote ROL - Free Report) and Xerox ( XRX Quick Quote XRX - Free Report) , all reporting stellar top- and bottom-line numbers. Sneak Peek Into Upcoming Earnings Releases
Let’s take a look at how three business services companies —
Republic Services, Inc. ( RSG Quick Quote RSG - Free Report) , FLEETCOR Technologies Inc. ( FLT Quick Quote FLT - Free Report) , and Dun & Bradstreet Holdings, Inc. ( DNB Quick Quote DNB - Free Report) — are placed ahead of their quarterly earnings releases on Nov 5.
Our quantitative model suggests that a company needs the right combination of the following two key ingredients — a positive
Earnings ESPand a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services provider Republic Services has an Earnings ESP of -0.54% and currently carries a Zacks Rank of 3. 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 is pegged at $2.58 billion, indicating a year-over-year decline of 2.4%. This projected decline is likely to be due to weak performance in collection, transfer and landfill lies of businesses.
The Zacks Consensus Estimate for quarterly earnings is pegged at 83 cents, suggesting a fall of 8.8% from the year-ago quarter. (Read More:
) What's In Store For Republic Services In Q3 Earnings?
Business payments company FLEETCOR has an Earnings ESP of -1.22% and currently carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for revenues is pegged at $586.04 million, calling for a decrease of 14% year over year, due to weakness across all four product categories — fuel, corporate payments, tolls, lodging, and gifts.
Decline in operating margins is likely to have weighed on the company’s bottom line, the Zacks Consensus Estimate for which is pinned at $2.66, indicating a decline of 14.2% year on year. (Read More:
) FLEETCOR to Report Q3 Earnings: What's in the Cards?
Business decisioning data and analytics provider Dun & Bradstreet has an Earnings ESP of 0.00% and currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for revenues is pegged at $443 million, suggesting a decline of 5% sequentially. The consensus mark for earnings is pinned at 22 cents, indicating a fall of 4.8%, quarter on quarter.
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