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Business Services Stock Earnings on Jul 25: V, EFX & More
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The second-quarter reporting cycle has started on a solid note, with strong earnings and revenue momentum. Moreover, estimates for the third quarter and beyond are showing upward movement.
Per the latest Earnings Preview, 87 S&P 500 companies (who collectively account for 25.7% of the index’s total market capitalization) have already reported results. Per the report, second-quarter 2018 total earnings for these companies increased 20.9% from the same period last year on 10.3% higher revenues, with 86.2% of the companies beating EPS estimates and 77% beating revenue estimates.
More than 413 companies are yet to report results in the current reporting cycle.
Bullish View
Per the above report, stocks in the Business Services sector are expected to record top- and bottom-line growth of 5.4% and 15.6%, respectively. Notably, the sector is one of the 11 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth. Total second-quarter 2018 earnings are expected to be up 21% on 8.3% higher revenues.
The outlook of the business services sector is highly dependent on the health of the broader economy, which is currently quite favorable. The entire U.S. economy is benefiting from Trump administration’s business-friendly approach, including tax cuts, higher spending and repeal of regulations. This has improved the employment scenario, and aided manufacturing and non-manufacturing activities.
The business services sector has performed well compared with the benchmark index year to date. The sector has gained 12%, which compares favorably with the Zacks S&P 500 Composite’s rally of 5.1% in the said time frame.
Stocks to Watch Out For
Given this bullish backdrop, investors interested in the business services stocks can watch out for four companies that are scheduled to report their respective quarterly numbers on Jul 25.
The Zacks Consensus Estimate for revenues and earnings is pegged at $5.08 billion and $1.08 per share, indicating year-over-year growth of 11.4% and 25.6%, respectively. The top line is expected to be driven by higher revenues from growth of key business drivers such as payments volume, cross border volume and process transactions. Lower tax rate (as a result of Tax Cuts and Jobs Act) and share repurchases made by the company are likely to boost the bottom line.
Visa boasts an attractive earnings surprise history, having surpassed estimates in all the trailing four quarters, with an average positive surprise of 8.4%. Currently, the company has an Earnings ESP of +0.04%. However, when we issued our earnings preview article, the Earnings ESP was -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Based in Georgia, Equifax (EFX - Free Report) , a leading information services provider to consumers and businesses, has a Zacks Rank #3. The company will report second-quarter 2018 results.
The Zacks Consensus Estimate for revenues is pegged at $886.1 million, indicating 3.4% year-over-year growth. Strength across the International and Workforce Solutions segments is expected to contribute to top-line growth. The USIS and Global Consumer Solutions segments are expected to remain weak.
The consensus mark for earnings per share is pegged at $1.54, indicating year-over-year decline of 3.8%. Costs related to IT and data security projects, and legal and professional fees incurred to address litigation claims in governmental as well as regulatory investigations pertaining to the cybersecurity incident are likely to weigh on the bottom line.
Equifax has an attractive earnings surprise history, having surpassed estimates in all the trailing four quarters, with an average positive surprise of 2.9%. Currently, the company has an Earnings ESP of +0.36%. When we issued our earnings preview article, its Earnings ESP was +1.08%.
Based in Georgia, Rollins (ROL - Free Report) is a global consumer and commercial services company. The company will release second-quarter 2018 results. Currently, it has a Zacks Rank #3.
The Zacks Consensus Estimate for revenues and earnings is pegged at $467.9 million and 32 cents per share, indicating year-over-year growth of 7.9% and 28%, respectively. The top line is expected to benefit from strength across all service lines, acquisitions, growing number of customers and increase in prices charged to customers. Benefit from the Tax Cuts and Jobs Act is likely to boost the bottom line.
Rollins has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in only one of the previous four quarters and met the same in two quarters, delivering an average beat of 0.3%. The company has an Earnings ESP of -6.25%.
Based in Texas,Waste Management (WM - Free Report) is the largest provider of comprehensive waste management services in North America. The company will report second-quarter 2018 results. Currently, it has a Zacks Rank #3.
The Zacks Consensus Estimate for revenues and earnings is pegged at $3.77 billion and $1.01 per share, indicating year-over-year growth of 2.6% and 24.7%, respectively. The top line is expected to benefit from higher yield and volume growth in its collection and disposal business, while the bottom line is likely to be positively impacted by tax benefits. (Read more: Waste Management Q2 Earnings: What's in the Cards?)
Waste Management has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, delivering an average beat of 3.6%. The company has an Earnings ESP of 0.00%.
According to the Zacks model, a company with a Zacks Rank #1, 2 (Buy) or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. We also don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.
A positive Earnings ESP along with a Zacks Rank #3 makes us confident of an earnings beat for Visa and Equifax in the to-be-reported quarter.
However, we cannot predict an earnings surprise for Rollins and Waste Management in the to-be-reported quarter. This is because, despite carrying a favorable Zacks Rank #3, Rollins’ negative Earnings ESP and Waste Management’s 0.00% Earnings ESP makes surprise prediction difficult.
Irrespective of an earnings beat or miss, investors are likely to focus on the companies’ fundamentals while making investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Business Services Stock Earnings on Jul 25: V, EFX & More
The second-quarter reporting cycle has started on a solid note, with strong earnings and revenue momentum. Moreover, estimates for the third quarter and beyond are showing upward movement.
Per the latest Earnings Preview, 87 S&P 500 companies (who collectively account for 25.7% of the index’s total market capitalization) have already reported results. Per the report, second-quarter 2018 total earnings for these companies increased 20.9% from the same period last year on 10.3% higher revenues, with 86.2% of the companies beating EPS estimates and 77% beating revenue estimates.
More than 413 companies are yet to report results in the current reporting cycle.
Bullish View
Per the above report, stocks in the Business Services sector are expected to record top- and bottom-line growth of 5.4% and 15.6%, respectively. Notably, the sector is one of the 11 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth. Total second-quarter 2018 earnings are expected to be up 21% on 8.3% higher revenues.
The outlook of the business services sector is highly dependent on the health of the broader economy, which is currently quite favorable. The entire U.S. economy is benefiting from Trump administration’s business-friendly approach, including tax cuts, higher spending and repeal of regulations. This has improved the employment scenario, and aided manufacturing and non-manufacturing activities.
The business services sector has performed well compared with the benchmark index year to date. The sector has gained 12%, which compares favorably with the Zacks S&P 500 Composite’s rally of 5.1% in the said time frame.
Stocks to Watch Out For
Given this bullish backdrop, investors interested in the business services stocks can watch out for four companies that are scheduled to report their respective quarterly numbers on Jul 25.
Based in California, Visa (V - Free Report) , a global payment technology company, will release fiscal third-quarter 2018 results. Currently, it has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for revenues and earnings is pegged at $5.08 billion and $1.08 per share, indicating year-over-year growth of 11.4% and 25.6%, respectively. The top line is expected to be driven by higher revenues from growth of key business drivers such as payments volume, cross border volume and process transactions. Lower tax rate (as a result of Tax Cuts and Jobs Act) and share repurchases made by the company are likely to boost the bottom line.
Visa boasts an attractive earnings surprise history, having surpassed estimates in all the trailing four quarters, with an average positive surprise of 8.4%. Currently, the company has an Earnings ESP of +0.04%. However, when we issued our earnings preview article, the Earnings ESP was -0.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Visa Inc. Price and EPS Surprise
Visa Inc. Price and EPS Surprise | Visa Inc. Quote
Based in Georgia, Equifax (EFX - Free Report) , a leading information services provider to consumers and businesses, has a Zacks Rank #3. The company will report second-quarter 2018 results.
The Zacks Consensus Estimate for revenues is pegged at $886.1 million, indicating 3.4% year-over-year growth. Strength across the International and Workforce Solutions segments is expected to contribute to top-line growth. The USIS and Global Consumer Solutions segments are expected to remain weak.
The consensus mark for earnings per share is pegged at $1.54, indicating year-over-year decline of 3.8%. Costs related to IT and data security projects, and legal and professional fees incurred to address litigation claims in governmental as well as regulatory investigations pertaining to the cybersecurity incident are likely to weigh on the bottom line.
Equifax has an attractive earnings surprise history, having surpassed estimates in all the trailing four quarters, with an average positive surprise of 2.9%. Currently, the company has an Earnings ESP of +0.36%. When we issued our earnings preview article, its Earnings ESP was +1.08%.
Equifax, Inc. Price and EPS Surprise
Equifax, Inc. Price and EPS Surprise | Equifax, Inc. Quote
Based in Georgia, Rollins (ROL - Free Report) is a global consumer and commercial services company. The company will release second-quarter 2018 results. Currently, it has a Zacks Rank #3.
The Zacks Consensus Estimate for revenues and earnings is pegged at $467.9 million and 32 cents per share, indicating year-over-year growth of 7.9% and 28%, respectively. The top line is expected to benefit from strength across all service lines, acquisitions, growing number of customers and increase in prices charged to customers. Benefit from the Tax Cuts and Jobs Act is likely to boost the bottom line.
Rollins has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in only one of the previous four quarters and met the same in two quarters, delivering an average beat of 0.3%. The company has an Earnings ESP of -6.25%.
Rollins, Inc. Price and EPS Surprise
Rollins, Inc. Price and EPS Surprise | Rollins, Inc. Quote
Based in Texas,Waste Management (WM - Free Report) is the largest provider of comprehensive waste management services in North America. The company will report second-quarter 2018 results. Currently, it has a Zacks Rank #3.
The Zacks Consensus Estimate for revenues and earnings is pegged at $3.77 billion and $1.01 per share, indicating year-over-year growth of 2.6% and 24.7%, respectively. The top line is expected to benefit from higher yield and volume growth in its collection and disposal business, while the bottom line is likely to be positively impacted by tax benefits. (Read more: Waste Management Q2 Earnings: What's in the Cards?)
Waste Management has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, delivering an average beat of 3.6%. The company has an Earnings ESP of 0.00%.
Waste Management, Inc. Price and EPS Surprise
Waste Management, Inc. Price and EPS Surprise | Waste Management, Inc. Quote
What Does the Zacks Model Predict?
According to the Zacks model, a company with a Zacks Rank #1, 2 (Buy) or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. We also don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.
A positive Earnings ESP along with a Zacks Rank #3 makes us confident of an earnings beat for Visa and Equifax in the to-be-reported quarter.
However, we cannot predict an earnings surprise for Rollins and Waste Management in the to-be-reported quarter. This is because, despite carrying a favorable Zacks Rank #3, Rollins’ negative Earnings ESP and Waste Management’s 0.00% Earnings ESP makes surprise prediction difficult.
Irrespective of an earnings beat or miss, investors are likely to focus on the companies’ fundamentals while making investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>