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Business Services Q1 Earnings Due on May 8: FDC, CVG, SYKE

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The earnings season is in full swing with over 1,000 companies reporting this week, including 126 S&P 500 members. The 358 S&P 500 companies that reported results till May 3, more or less confirm that overall first-quarter results are likely to be the best in about three years.

Total earnings for these 358 companies (accounting for 78.2% of the index’s total market capitalization) are up 12.9% on 7.9% higher revenues, with 74.3% beating earnings estimates and 65.9% surpassing top-line expectations. Based on the hitherto observed pattern, the first quarter is anticipated to register double-digit percentage growth on a year-over-year basis.  

Per the latest Earnings Outlook, overall first-quarter earnings for all the S&P 500 companies are expected to be up 11.9% on a 6.2% growth in revenues. This represents a healthy improvement from fourth-quarter 2016 that recorded the highest growth in the preceding two years. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, improved job market and rising oil prices. Experts widely believe that earnings growth is likely to continue in double digits in the latter half of 2017 and beyond.

For the first quarter as a whole, about three of the 16 Zacks sectors are expected to witness an earnings decline, with Autos and Transportation being the biggest drag.

The Business Services sector is looking reasonably good this quarter. For the sector, earnings are expected to grow 10% year over year while sales are touted to rise 2.8%, driven by higher capital investments. The primary growth drivers in this highly fragmented sector hinge on a healthy economy with decent prospects for job growth, higher disposable income and new business initiatives. On an average, there were 178,000 job additions per month in the first quarter. The unemployment rate rose marginally to 4.5% in March due to higher participation rate of 63% as more people looked for work, a clear indication that the economy is improving. Enjoying the fruits of a resurgent job market, low inflationary pressures and cheaper oil bills, consumer confidence has also held its fort.

Let’s have a sneak peek at three major Business Services stocks scheduled to report first-quarter 2017 earnings tomorrow to see how things are shaping up for the upcoming results.

First Data Corporation is scheduled to report results before the opening bell. The company continues to maintain its leading position in bank acquiring channel through strategic partnerships. First Data is making good progress with its partnerships with Ford Motor Company and Wal-Mart. With growth initiatives going as planned, the company’s balance sheet, margins and cash generation capacity are likely to improve. Continued focus on innovation and strategic investments are expected to drive growth. For the impending quarter, we cannot conclusively predict and earnings beat as a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. The company has an Earnings ESP of -4.76%, and Zacks Rank #3 making an earnings surprise prediction uncertain (Read more: What to Expect from First Data this Earnings Season?)

First Data Corporation Price and EPS Surprise

 

First Data Corporation Price and EPS Surprise | First Data Corporation Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Convergys Corporation is slated to report earnings after the closing bell. The company is a global leader of outsourced, integrated billing and customer care services. It focuses on developing long-term strategic relationships with clients in customer-intensive industries. We remain inconclusive on earnings beat prediction this quarter as the company has an ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here

Convergys Corporation Price and EPS Surprise

 

Convergys Corporation Price and EPS Surprise | Convergys Corporation Quote

Sykes Enterprises, Incorporated is scheduled to report results after the closing bell. The company is a leader in providing vertically integrated technology-based solutions through an integrated strategy of combining its information technology services with an emerging e-commerce platform. Over the trailing four quarters, the company has beaten estimates on all occasions, with an average positive surprise of 12.0%. We cannot conclusive predict an earnings beat this quarter as the company has an ESP of 0.00% and a Zacks Rank #2.

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