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Nonfarm Payrolls Crash All Estimates in January: 5 Top Picks
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On Feb 2, the Department of Labor reported that the U.S. economy added 353,000 nonfarm jobs in January, well above the consensus estimate of 185,000. Moreover, total job additions of the previous two months were revised upwardly by 126,000.
Major sectors that added jobs included professional and business services (74,000), health care (70,000), retail trade (45,000), government (36,000), social assistance (30,000) and manufacturing (23,000).
The unemployment rate in January was 3.7%, the same as in December. The consensus estimate was 3.8%. However, the real unemployment rate (including discouraged workers and those holding part-time jobs for economic reasons) edged up to 7.2%.
The labor force participation rate was unchanged at 62.5%. Average workweek dropped to 34.1 in January from 34.3 in December. Hourly wage rate increased 0.6% in January compared with 0.4% in December. The consensus estimate was 0.3%. Year over year, the hourly wage rate increased 4.5%, beating the consensus estimate of 4.1%.
Business Services Sector to Benefit
The U.S. Business Services space has been benefitting from the strong fundamentals of the economy. Industries within this sector are mature, with demand for services in good shape. The stuffing industry has been benefiting from a resilient labor market.
The industry has been increasingly leveraging technology to streamline processes, enhance efficiency, and provide better services. Utilizing tech-driven recruitment methods such as artificial intelligence (AI), social media, and Big Data are on the rise.
Growth in the technology services industry has increased the number of remote workers in the wake of the pandemic. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructure that will enable them to provide flexible and easy-to-adopt hybrid solutions.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating AI and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Our Top Picks
We have narrowed our search to five business services stocks with strong growth potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Zacks Rank #1 Duolingo has an expected revenue and earnings growth rate of 29.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the last 30 days.
S&P Global Inc. (SPGI - Free Report) remains well-poised to gain from the growing demand for business information services. Buyouts help innovate, increase differentiated content and develop new products. New service launches have been aiding the company's growth. Dividend payments and share buybacks boost investors' confidence in SPGI. Increasing the current ratio also bodes well for SPGI.
Zacks Rank #2 S&P Global has an expected revenue and earnings growth rate of 7.3% and 14.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Korn Ferry (KFY - Free Report) is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry. KFY provides executive recruitment services exclusively on a retained basis and serves the global recruitment needs of clients from middle to executive management.
KFY's clients are many of the world's largest and most prestigious public and private companies, middle-market and emerging growth companies as well as governmental and not-for-profit organizations.
Zacks Rank #2 Korn Ferry has an expected revenue and earnings growth rate of 2.4% and 8.9%, respectively, for next year (ending April 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.2% over the last 60 days.
WNS (Holdings) Lld. (WNS - Free Report) is a recognized leader in business process outsourcing. WNS delivers value to its clients by bringing operational excellence and deep industry and functional knowledge to their critical business processes.
WNS serves several industries, including travel, insurance, financial services, healthcare, professional services, manufacturing, distribution and retail. WNS also provide essential corporate functions, such as finance and accounting, human resources research and analytics.
Zacks Rank #2 WNS has an expected revenue and earnings growth rate of 9.3% and 7.7%, respectively, for next year (ending March 2025). The Zacks Consensus Estimate for next-year earnings has improved 1.3% over the last 30 days.
Gartner Inc. (IT - Free Report) offers timely, thought-provoking and comprehensive analysis that is known for its high quality, independence and objectivity. IT’s research reports have become indispensable tools for various companies across different sectors, strengthening its leading position in the market. IT company has a large and diverse addressable market with low customer concentration that mitigates operating risks.
Zacks Rank #2 IT has an expected revenue and earnings growth rate of 7.7% and 9.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
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Nonfarm Payrolls Crash All Estimates in January: 5 Top Picks
On Feb 2, the Department of Labor reported that the U.S. economy added 353,000 nonfarm jobs in January, well above the consensus estimate of 185,000. Moreover, total job additions of the previous two months were revised upwardly by 126,000.
Major sectors that added jobs included professional and business services (74,000), health care (70,000), retail trade (45,000), government (36,000), social assistance (30,000) and manufacturing (23,000).
The unemployment rate in January was 3.7%, the same as in December. The consensus estimate was 3.8%. However, the real unemployment rate (including discouraged workers and those holding part-time jobs for economic reasons) edged up to 7.2%.
The labor force participation rate was unchanged at 62.5%. Average workweek dropped to 34.1 in January from 34.3 in December. Hourly wage rate increased 0.6% in January compared with 0.4% in December. The consensus estimate was 0.3%. Year over year, the hourly wage rate increased 4.5%, beating the consensus estimate of 4.1%.
Business Services Sector to Benefit
The U.S. Business Services space has been benefitting from the strong fundamentals of the economy. Industries within this sector are mature, with demand for services in good shape. The stuffing industry has been benefiting from a resilient labor market.
The industry has been increasingly leveraging technology to streamline processes, enhance efficiency, and provide better services. Utilizing tech-driven recruitment methods such as artificial intelligence (AI), social media, and Big Data are on the rise.
Growth in the technology services industry has increased the number of remote workers in the wake of the pandemic. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructure that will enable them to provide flexible and easy-to-adopt hybrid solutions.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating AI and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Our Top Picks
We have narrowed our search to five business services stocks with strong growth potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Zacks Rank #1 Duolingo has an expected revenue and earnings growth rate of 29.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the last 30 days.
S&P Global Inc. (SPGI - Free Report) remains well-poised to gain from the growing demand for business information services. Buyouts help innovate, increase differentiated content and develop new products. New service launches have been aiding the company's growth. Dividend payments and share buybacks boost investors' confidence in SPGI. Increasing the current ratio also bodes well for SPGI.
Zacks Rank #2 S&P Global has an expected revenue and earnings growth rate of 7.3% and 14.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Korn Ferry (KFY - Free Report) is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry. KFY provides executive recruitment services exclusively on a retained basis and serves the global recruitment needs of clients from middle to executive management.
KFY's clients are many of the world's largest and most prestigious public and private companies, middle-market and emerging growth companies as well as governmental and not-for-profit organizations.
Zacks Rank #2 Korn Ferry has an expected revenue and earnings growth rate of 2.4% and 8.9%, respectively, for next year (ending April 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.2% over the last 60 days.
WNS (Holdings) Lld. (WNS - Free Report) is a recognized leader in business process outsourcing. WNS delivers value to its clients by bringing operational excellence and deep industry and functional knowledge to their critical business processes.
WNS serves several industries, including travel, insurance, financial services, healthcare, professional services, manufacturing, distribution and retail. WNS also provide essential corporate functions, such as finance and accounting, human resources research and analytics.
Zacks Rank #2 WNS has an expected revenue and earnings growth rate of 9.3% and 7.7%, respectively, for next year (ending March 2025). The Zacks Consensus Estimate for next-year earnings has improved 1.3% over the last 30 days.
Gartner Inc. (IT - Free Report) offers timely, thought-provoking and comprehensive analysis that is known for its high quality, independence and objectivity. IT’s research reports have become indispensable tools for various companies across different sectors, strengthening its leading position in the market. IT company has a large and diverse addressable market with low customer concentration that mitigates operating risks.
Zacks Rank #2 IT has an expected revenue and earnings growth rate of 7.7% and 9.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.