The earnings season is in full swing with about 183 S&P 500 companies reporting this week. About 97 S&P 500 companies have already released their results till Jul 21, reconfirming broad-based expectations of better-than expected earnings. Total earnings for these 97 companies (accounting for 28.1% of the index’s total market capitalization) are up 8.4% year over year on 5.1% higher revenues, with 78.4% beating earnings estimates and 72.2% surpassing top-line expectations. Based on the hitherto observed pattern, the Apr–Jun 2017 quarter is anticipated to register high single-digit percentage earnings growth on a year-over-year basis.
Per the Earnings Preview, overall earnings for all the S&P 500 companies are expected to be up 8.6% on 4.7% growth in revenues. Although it represents a slightly tempered growth projection compared with the double-digit growth rate of the previous quarter, the dollar amount of the total earnings is likely to be on par or even better than the all-time high achieved in fourth-quarter 2016. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, better job market scenario and rising oil prices. Experts widely believe that earnings growth is likely to be in double digits in 2018 and beyond.
For the April–June quarter as a whole, about five of the 16 Zacks sectors are expected to witness an earnings decline, with Autos, Conglomerates and Utilities being the biggest drag.
The Business Services sector appears reasonably healthy. For the sector, earnings are expected to improve 9.4% year over year while sales are touted to rise 4.4% due to higher disposable income and new business initiatives.
Let’s take a sneak peek at five major Business Services stocks scheduled to report earnings tomorrow to see how things are shaping up for the upcoming results.
Republic Services, Inc. (RSG - Free Report) is scheduled to report second-quarter 2017 results after the closing bell. The company has significantly expanded its product offerings in the e-commerce platform to address the evolving needs of the customers. This low-cost sales channel is likely to witness higher earnings in the quarter. In addition, the company improved the capabilities and functionality of the customer portal and mobile app with the enrolment of over 1.8 million customers. These value-driven interactive features are likely to lead to incremental orders and higher revenues in the to-be-reported quarter. (Read more: What to Expect from Republic Services in Q2 Earnings?)
In the second quarter, the company’s earnings are expected to rise 7.3% year over year on 5.2% higher revenues. For the quarter, the company has an Earnings ESP of 0.00%, and Zacks Rank #2 (Buy), making an earnings prediction uncertain. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) for a likely earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Automatic Data Processing, Inc. (ADP - Free Report) is slated to report fourth-quarter fiscal 2017 results before the opening bell. Apart from stiff competition, we expect ADP’s investments in new initiatives to weigh on its earnings. Moreover, the divestiture of Consumer Health Spending Account and Consolidated Omnibus Reconciliation Act businesses will impact top-line growth. We remain inconclusive on an earnings beat this quarter as it has an ESP of +2.99% and a Zacks Rank #4 (Sell). (Read More: ADP Set to Report Q4 Earnings: Disappointment in Store?)
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nielsen Holdings plc (NLSN - Free Report) will report second-quarter 2017 results before the opening bell. Nielsen is partnering with big companies to extend its TV ratings service beyond the Nielsen Local TV Ratings Service. The company signed a multi-year agreement with Tennis Channel, providing its National TV Ratings service to the latter. Earlier, it also renewed its agreement with CBS Corporation’s CBS Radio to deliver its local market insights and currency ratings to the broadcast media operator across all the Portable People Meter metros. We remain uncertain on an earnings beat this quarter as it has an ESP of 0.00% and a Zacks Rank #3. (Read More: Nielsen to Report Q2 Earnings: Will it Surprise?)
S&P Global Inc. (SPGI - Free Report) is scheduled to report second-quarter 2017 results before the market opens. S&P Global’s focus on its core business is helping it emerge as a leader among rating providers, benchmark providers and analytics in the global capital as well as commodity markets. We remain reasonably certain on an earnings beat this quarter as it has an ESP of +2.55% and a Zacks Rank #2. (Read More: S&P Global to Post Q2 Earnings: A Beat in the Cards?)
Mastercard Incorporated (MA - Free Report) is slated to report second-quarter 2017 results before the opening bell. The company’s effort to expand its services business, which has been posting strong earnings, is a key differentiator in the market. Higher utilization of the company’s service offerings led to revenue acceleration in the previous quarter, and the same is expected in the quarter to be reported. We remain uncertain on an earnings beat this quarter as it has an ESP of 0.00% and a Zacks Rank #2. (Read More: Can Mastercard Keep its Earnings Streak Alive in Q2?)
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