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6 Must-Buy Business Services Stocks Set to Beat on Q4 Earnings
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Wall Street maintained its momentum of 2019 since the beginning of this year, despite facing intermittent fluctuations due to geopolitical conflict with Iran and the outbreak of coronavirus in China. Meanwhile, fourth-quarter 2019 results so far have not been as disappointing as expected initially. However, overall earnings are still expected to dip.
As of Jan 24, just 85 S&P 500 members reported fourth quarter earnings results. Total earnings of these companies are down 0.2% from the same period last year on 3.4% higher revenues. Of the total, 70.6% surpassed EPS estimates while 72.9% outpaced revenue estimates.
As of Jan 24, total earnings of the S&P 500 Index are anticipated to be down 2.6% from the same period last year on 3.7% higher revenues. This is marked an improvement from earnings decline of 3.2% from the same period last year on 3.5% higher revenues, projected at the beginning of the reporting cycle. (Read More: Previewing Tech Sector Earnings)
Business Services Sector in Q4
The Zacks defined Business Services sector rallied nearly 30.4% in the past year. Moreover, the sector has witnessed an impressive surge of 10.2% in the past three months and is currently in the top 25% of the Zacks defined 16 broad sectors.
The industry benefited from higher government and personal spending. Since service firms have less foreign sales exposure compared to goods companies, the industry is less susceptible to trade war woes. Also, service firms incur lower foreign input costs that might be subject to tariffs.
The Business Service sector benefited from higher demand for expertise to improve operational efficiency and reduce costs. Revenues and cash flows of most of the industry participants are expected to have remained stable through the economic cycle, enabling them to pay out stable dividends.
Rising demand for risk mitigation services was a major growth driver for the Business services sector. Changes in market dynamics were more or less a constant phenomenon, exposing companies to credit, funds and operational risks. Accurate market and financial information are required for risk mitigation, which spurred demand for business information services.
With several large and mid-sized companies shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services and business service providers gained impressively.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to gain after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our six picks in the past three months.
S&P Global Inc. (SPGI - Free Report) provides ratings, benchmarks, analytics, and data to the capital and commodity markets worldwide. It operates through four segments: S&P Global Ratings (Ratings), S&P Global Market Intelligence (Market Intelligence), S&P Global Platts (Platts), and S&P Dow Jones Indices (Indices). The company has an Earnings ESP of +0.49%.
S&P Global has an expected earnings growth rate of 11% for the current year. The Zacks Consensus Estimate for the current year has improved 0.9% over the last 30 days. The last four-quarter positive earnings surprise is 3.6%, on average. S&P Global is set to release earnings results on Feb 6, before the opening bell.
FleetCor Technologies Inc. provides commercial payment solutions in North America, Latin America, Europe and Australasia. It offers fuel payment solutions to businesses and government entities that operate vehicle fleets, as well as to oil and leasing companies, and fuel marketers. The company has an Earnings ESP of +0.70%.
FleetCor Technologies has an expected earnings growth rate of 15.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 30 days. The last four-quarter positive earnings surprise is 2.1%, on average. FleetCor Technologies is set to release earnings results on Feb 6, after the closing bell.
Global Payments Inc. (GPN - Free Report) provides payment technology and software solutions for card, electronic, check, and digital-based payments. It operates in three segments: North America, Europe, and Asia-Pacific. The company has an Earnings ESP of +3.15%.
Global Payments has an expected earnings growth rate of 22.6% for the current year. The last four-quarter positive earnings surprise is 2.4%, on average. Global Payments is set to release earnings results on Feb 12, before the opening bell.
Waste Management Inc. (WM - Free Report) provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. The company has an Earnings ESP of +4.19%.
Waste Management has an expected earnings growth rate of 6.4% for the current year. The last four-quarter positive earnings surprise is 3.8%, on average. The company is set to release earnings results on Feb 13, before the opening bell.
Fidelity National Information Services Inc. (FIS - Free Report) operates as a financial services technology company in the United States and internationally. It operates through the Integrated Financial Solutions and Global Financial Solutions segments. The company has an Earnings ESP of +0.45%.
Fidelity has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. The last four-quarter positive earnings surprise is 2.9%, on average. Fidelity is set to release earnings results on Feb 13, before the opening bell.
Republic Services Inc. (RSG - Free Report) provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico. The company has an Earnings ESP of +3.54%.
Republic Services has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 30 days. The last four-quarter positive earnings surprise is 3.1%, on average. Republic Services is set to release earnings results on Feb 13, after the closing bell.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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6 Must-Buy Business Services Stocks Set to Beat on Q4 Earnings
Wall Street maintained its momentum of 2019 since the beginning of this year, despite facing intermittent fluctuations due to geopolitical conflict with Iran and the outbreak of coronavirus in China. Meanwhile, fourth-quarter 2019 results so far have not been as disappointing as expected initially. However, overall earnings are still expected to dip.
Better-Than-Expected Fourth-Quarter Earnings Results
As of Jan 24, just 85 S&P 500 members reported fourth quarter earnings results. Total earnings of these companies are down 0.2% from the same period last year on 3.4% higher revenues. Of the total, 70.6% surpassed EPS estimates while 72.9% outpaced revenue estimates.
As of Jan 24, total earnings of the S&P 500 Index are anticipated to be down 2.6% from the same period last year on 3.7% higher revenues. This is marked an improvement from earnings decline of 3.2% from the same period last year on 3.5% higher revenues, projected at the beginning of the reporting cycle. (Read More: Previewing Tech Sector Earnings)
Business Services Sector in Q4
The Zacks defined Business Services sector rallied nearly 30.4% in the past year. Moreover, the sector has witnessed an impressive surge of 10.2% in the past three months and is currently in the top 25% of the Zacks defined 16 broad sectors.
The industry benefited from higher government and personal spending. Since service firms have less foreign sales exposure compared to goods companies, the industry is less susceptible to trade war woes. Also, service firms incur lower foreign input costs that might be subject to tariffs.
The Business Service sector benefited from higher demand for expertise to improve operational efficiency and reduce costs. Revenues and cash flows of most of the industry participants are expected to have remained stable through the economic cycle, enabling them to pay out stable dividends.
Rising demand for risk mitigation services was a major growth driver for the Business services sector. Changes in market dynamics were more or less a constant phenomenon, exposing companies to credit, funds and operational risks. Accurate market and financial information are required for risk mitigation, which spurred demand for business information services.
With several large and mid-sized companies shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services and business service providers gained impressively.
Our Top Picks
We have narrowed down our search to six Business Services stocks. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to gain after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our six picks in the past three months.
S&P Global Inc. (SPGI - Free Report) provides ratings, benchmarks, analytics, and data to the capital and commodity markets worldwide. It operates through four segments: S&P Global Ratings (Ratings), S&P Global Market Intelligence (Market Intelligence), S&P Global Platts (Platts), and S&P Dow Jones Indices (Indices). The company has an Earnings ESP of +0.49%.
S&P Global has an expected earnings growth rate of 11% for the current year. The Zacks Consensus Estimate for the current year has improved 0.9% over the last 30 days. The last four-quarter positive earnings surprise is 3.6%, on average. S&P Global is set to release earnings results on Feb 6, before the opening bell.
FleetCor Technologies Inc. provides commercial payment solutions in North America, Latin America, Europe and Australasia. It offers fuel payment solutions to businesses and government entities that operate vehicle fleets, as well as to oil and leasing companies, and fuel marketers. The company has an Earnings ESP of +0.70%.
FleetCor Technologies has an expected earnings growth rate of 15.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 30 days. The last four-quarter positive earnings surprise is 2.1%, on average. FleetCor Technologies is set to release earnings results on Feb 6, after the closing bell.
Global Payments Inc. (GPN - Free Report) provides payment technology and software solutions for card, electronic, check, and digital-based payments. It operates in three segments: North America, Europe, and Asia-Pacific. The company has an Earnings ESP of +3.15%.
Global Payments has an expected earnings growth rate of 22.6% for the current year. The last four-quarter positive earnings surprise is 2.4%, on average. Global Payments is set to release earnings results on Feb 12, before the opening bell.
Waste Management Inc. (WM - Free Report) provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. The company has an Earnings ESP of +4.19%.
Waste Management has an expected earnings growth rate of 6.4% for the current year. The last four-quarter positive earnings surprise is 3.8%, on average. The company is set to release earnings results on Feb 13, before the opening bell.
Fidelity National Information Services Inc. (FIS - Free Report) operates as a financial services technology company in the United States and internationally. It operates through the Integrated Financial Solutions and Global Financial Solutions segments. The company has an Earnings ESP of +0.45%.
Fidelity has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. The last four-quarter positive earnings surprise is 2.9%, on average. Fidelity is set to release earnings results on Feb 13, before the opening bell.
Republic Services Inc. (RSG - Free Report) provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico. The company has an Earnings ESP of +3.54%.
Republic Services has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for the current year has improved 0.3% over the last 30 days. The last four-quarter positive earnings surprise is 3.1%, on average. Republic Services is set to release earnings results on Feb 13, after the closing bell.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>