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4 Service Givers to Beat on Q1 Earnings Amid Coronavirus Crisis

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The first quarter of 2020 started on an optimistic note with the ‘Phase One’ trade deal between the United States and China bringing some market relief from the nearly two-year long trade war. Back then, the U.S. economy was showing strength and stability, growing moderately.

However, the situation started worsening from March due to the coronavirus outbreak, which significantly disrupted manufacturing and service activities, hitting economies hard in the United States and across the globe.

The Purchasing Managers' Index (PMI) measured by Institute of Supply Management (ISM) declined to 49.1% in March from 50.1% in February, indicating a contraction of economic activity in the manufacturing sector. Moreover, the ISM-measured Non-Manufacturing Index (NMI) came down to 52.5% in March from February’s 57.3%, indicating a considerably slower rate of growth in the services sector.

Despite such worries, the first-quarter 2020 reporting cycle for the Business Servicessector commenced on a fairly positive note. So far, we have seen impressive quarterly results from sector participants like Equifax (EFX - Free Report) , Interpublic (IPG - Free Report) , IQVIA Holdings (IQV - Free Report) , S&P Global (SPGI - Free Report) and Omnicom, each reporting better-than-expected top- as well as bottom-line numbers.

We believe since the virus outbreak started affecting businesses from the second half of March, its impact will be more evident in the June-end quarter results.

Meanwhile, for this reporting cycle, analysts are expecting considerable improvement in earnings from the sector. Total earnings of business services companies in the S&P 500 universe are expected to be up 3.2% on 7.4% higher revenues (read more: The Coronavirus Pandemic and its Impact on Corporate Earnings).

Selecting the Winners

This is the right time for you to pick some business services stocks that are well-positioned to beat on earnings in their upcoming releases.

Zeroing in on the stocks with earnings beat potential might be a daunting task unless one knows the art of shortlisting to pick the best bets. One way to do it is by choosing stocks with the ideal combination of the two key ingredients: a positive Earnings ESP and a top Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

The Earnings ESP is our proprietary methodology for identifying stocks that have high chances of beating estimates in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this perfect mix of elements, the odds of a positive earnings surprise are as high as 70%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our Picks

Environmental services provider US Ecology (ECOL - Free Report) has an Earnings ESP of +57.9% and carries a Zacks Rank of 3 currently. The company is slated to report first-quarter 2020 results on May 7 after the bell. You can see the complete list of today’s Zacks #1 Rank stocks here.

US Ecology, Inc. Price and EPS Surprise

Financial technology and bank holding company Green Dot Corporation (GDOT - Free Report) has an Earnings ESP of +3.83% and carries a Zacks Rank of 3, at present. The company will release quarterly figures on May 11 after the bell.

Green Dot Corporation Price and EPS Surprise

Management, marketing, technology, and policy consulting and implementation services provider ICF International (ICFI - Free Report) has an Earnings ESP of +3.08% and currently holds a Zacks Rank of 3. The company is scheduled to report earnings results on May 5 after the bell.

ICF International, Inc. Price and EPS Surprise

Residential and commercial termite and pest control, restoration, and cleaning services provider ServiceMaster Global Holdings, Inc. has an Earnings ESP of +1.29% and carries a Zacks Rank of 3 currently. The company will announce first-quarter numbers on May 7 before the bell.

ServiceMaster Global Holdings, Inc. Price and EPS Surprise

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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