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Zacks Industry Outlook Highlights: Avis Budget Group, HeadHunter Group and WNS (Holdings)
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For Immediate Release
Chicago, IL – November 10, 2021 – Today, Zacks Equity Research discusses Business Services, including Avis Budget Group, Inc. (CAR - Free Report) , HeadHunter Group PLC (HHR - Free Report) and WNS (Holdings) Limited (WNS - Free Report) .
Economic recovery, leading to a rise in manufacturing and service activities, along with the increased technology adoption and success of the work-from-home trend, is enabling the Zacks Business-Services industry to support a growing demand environment.
Prudent growth strategies, innovation and technology enhancements are helping Avis Budget Group, HeadHunterGroup and WNS (Holdings) to sail through the ongoing pandemic.
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 will continue to change the way industry players have conducted businesses and delivered services so far.
The key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and cybersecurity. To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand, and targeting end markets.
What's Shaping the Future of the Business Services Industry?
Economic Recovery: The industry is a major beneficiary of manufacturing and service activities, which, in turn, are dependent on economic health. A steady economic recovery is evident from the latest third-quarter 2021 GDP number, which according to the "advance" estimate released by the Bureau of Economic Analysis, increased at an annual rate of 2%.
The October Manufacturing PMI measured by Institute for Supply Management (ISM) touched 60.8%, clocking the 17th consecutive month of expansion in economic activity. Non-manufacturing activities clocked 4.8% growth from September to October, as the Services PMI measured by ISM touched an all-time high of 64.1% and registered the 17th consecutive month of expansion.
Demand Stability: The industry is mature with demand for services being in good shape over time. Revenues, income and cash flows are anticipated to steadily make way to the pre-pandemic healthy levels, helping most industry players pay out stable dividends.
Relaxing Immigration Restrictions: Higher talent costs due to a competitive talent market, especially under the Trump-era restrictions on immigration, have been a headwind for the industry. However, President Joe Biden’s ongoing moves to lift the Trump-era ban on legal immigration will help service providers thrive with the increased flow of foreign talent.
Zacks Industry Rank Indicates Strong Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #90, which places it in the top 36% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The analysts covering the companies in this industry have been steadily pushing their estimates north. Over the past year, the industry’s consensus earnings estimate for 2021 has moved 60.7% north.
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 Outperforms Sector and the S&P 500
Over the past year, the Zacks Business Services industry has outperformed the S&P 500 composite and the broader sector.
While the industry has gained a huge 226.9%, the S&P 500 composite has rallied 33.8%. In contrast, the broader sector has declined 16.9%.
Industry's Current Valuation
On the basis of 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 25.93 compared with the S&P 500’s 22.19 and the sector’s 30.74.
Over the past five years, the industry has traded as high as 30.43X, as low as 10.72X and at the median of 23.63X.
3 Service Stocks to Bet On
We are presenting three stocks that are well poised to grow in the near term.
Avis Budget Group : This provider of car and truck rentals, car sharing, and ancillary services currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks the complete list of today’s Zacks #1 Rank stocks here.
Avis Budget is currently focusing on boosting its top line by enhancing the customer experience with the help of technology and improved service quality. The company is targeting margin improvement by controlling fixed and variable expenses.
The Zacks Consensus Estimate for the current-year EPS moved up 55.9% in the past 60 days. The stock has skyrocketed 688.3% in a year’s time.
HeadHunter Group : The company operates an online recruitment platform globally and currently carries a Zacks Rank #2 (Buy). Its business is benefiting from increasing demand for online platforms and the resultant addition of customers. The acquisition of cloud-based HCMsoftware provider Skillaz will likely help the company expand in the enterprise solutions market.
The Zacks Consensus Estimate for the ongoing year’s EPS has been revised 3.9% upward over the past 60 days. The stock has gained 119.3% over the past year.
WNS (Holdings) Limited: This business process management (BPM) company offers data, voice, and analytical and business transformation services and currently carries a Zacks Rank #2. WNS is trying to meet the pandemic-induced digital transformation trends by investing in digital capabilities that streamline clients’ operations and enhance decision making through data and analytics. Its investments are mainly focused on creation and innovation labs, specialized centers of excellence and industry-specific digital offerings.
The company’s opportunities in the BPM space are also on the rise, with clients’ growing need to use analytics and industry-specific expertise for transforming their business models.
The Zacks Consensus Estimate for the ongoing year’s EPS has been revised 3.1% upward over the past 60 days. The stock has gained 30.8% over the past year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights: Avis Budget Group, HeadHunter Group and WNS (Holdings)
For Immediate Release
Chicago, IL – November 10, 2021 – Today, Zacks Equity Research discusses Business Services, including Avis Budget Group, Inc. (CAR - Free Report) , HeadHunter Group PLC (HHR - Free Report) and WNS (Holdings) Limited (WNS - Free Report) .
Link: https://www.zacks.com/commentary/1825636/3-top-stocks-from-the-flourishing-business-services-industry
Economic recovery, leading to a rise in manufacturing and service activities, along with the increased technology adoption and success of the work-from-home trend, is enabling the Zacks Business-Services industry to support a growing demand environment.
Prudent growth strategies, innovation and technology enhancements are helping Avis Budget Group, HeadHunterGroup and WNS (Holdings) to sail through the ongoing pandemic.
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 will continue to change the way industry players have conducted businesses and delivered services so far.
The key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and cybersecurity. To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand, and targeting end markets.
What's Shaping the Future of the Business Services Industry?
Economic Recovery: The industry is a major beneficiary of manufacturing and service activities, which, in turn, are dependent on economic health. A steady economic recovery is evident from the latest third-quarter 2021 GDP number, which according to the "advance" estimate released by the Bureau of Economic Analysis, increased at an annual rate of 2%.
The October Manufacturing PMI measured by Institute for Supply Management (ISM) touched 60.8%, clocking the 17th consecutive month of expansion in economic activity. Non-manufacturing activities clocked 4.8% growth from September to October, as the Services PMI measured by ISM touched an all-time high of 64.1% and registered the 17th consecutive month of expansion.
Demand Stability: The industry is mature with demand for services being in good shape over time. Revenues, income and cash flows are anticipated to steadily make way to the pre-pandemic healthy levels, helping most industry players pay out stable dividends.
Relaxing Immigration Restrictions: Higher talent costs due to a competitive talent market, especially under the Trump-era restrictions on immigration, have been a headwind for the industry. However, President Joe Biden’s ongoing moves to lift the Trump-era ban on legal immigration will help service providers thrive with the increased flow of foreign talent.
Zacks Industry Rank Indicates Strong Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #90, which places it in the top 36% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The analysts covering the companies in this industry have been steadily pushing their estimates north. Over the past year, the industry’s consensus earnings estimate for 2021 has moved 60.7% north.
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 Outperforms Sector and the S&P 500
Over the past year, the Zacks Business Services industry has outperformed the S&P 500 composite and the broader sector.
While the industry has gained a huge 226.9%, the S&P 500 composite has rallied 33.8%. In contrast, the broader sector has declined 16.9%.
Industry's Current Valuation
On the basis of 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 25.93 compared with the S&P 500’s 22.19 and the sector’s 30.74.
Over the past five years, the industry has traded as high as 30.43X, as low as 10.72X and at the median of 23.63X.
3 Service Stocks to Bet On
We are presenting three stocks that are well poised to grow in the near term.
Avis Budget Group : This provider of car and truck rentals, car sharing, and ancillary services currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks the complete list of today’s Zacks #1 Rank stocks here.
Avis Budget is currently focusing on boosting its top line by enhancing the customer experience with the help of technology and improved service quality. The company is targeting margin improvement by controlling fixed and variable expenses.
The Zacks Consensus Estimate for the current-year EPS moved up 55.9% in the past 60 days. The stock has skyrocketed 688.3% in a year’s time.
HeadHunter Group : The company operates an online recruitment platform globally and currently carries a Zacks Rank #2 (Buy). Its business is benefiting from increasing demand for online platforms and the resultant addition of customers. The acquisition of cloud-based HCMsoftware provider Skillaz will likely help the company expand in the enterprise solutions market.
The Zacks Consensus Estimate for the ongoing year’s EPS has been revised 3.9% upward over the past 60 days. The stock has gained 119.3% over the past year.
WNS (Holdings) Limited: This business process management (BPM) company offers data, voice, and analytical and business transformation services and currently carries a Zacks Rank #2. WNS is trying to meet the pandemic-induced digital transformation trends by investing in digital capabilities that streamline clients’ operations and enhance decision making through data and analytics. Its investments are mainly focused on creation and innovation labs, specialized centers of excellence and industry-specific digital offerings.
The company’s opportunities in the BPM space are also on the rise, with clients’ growing need to use analytics and industry-specific expertise for transforming their business models.
The Zacks Consensus Estimate for the ongoing year’s EPS has been revised 3.1% upward over the past 60 days. The stock has gained 30.8% over the past year.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.