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Business Services Q1 Earnings on May 7: IT, FISV & More
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Business Services has been majorly affected by the coronavirus pandemic, mainly due to its high dependency on economic activity. The pandemic has 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) has been decreasing. The PMI stood at 41.5%, 49.1% and 50.1% in April, March and February respectively, underscoring a contraction of economic activity in the manufacturing sector. The ISM-measured Non-Manufacturing Index (NMI) showed a similar trend and was 41.8%, 52.5% and 57.3% respectively in April, March and February, indicating contraction in the services sector as well.
However, since the virus outbreak started affecting businesses from the second half of March, its impact will be more pronounced in the June-end quarter results. 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 6.7% on 6.7% higher revenues (read more: Tech Sector Shows its Earnings Power).
So far, we have seen impressive quarterly results from sector participants like Equifax (EFX - Free Report) , Aptiv (APTV - Free Report) , Interpublic (IPG - Free Report) , S&P Global and Omnicom, each reporting better-than-expected top- as well as bottom-line numbers.
Glimpse of Some Upcoming Q1 Releases
Given this backdrop, let’s take a look at how the five business services companies — Gartner (IT - Free Report) , Fiserv , FLEETCOR , Fidelity National Information Services (FIS - Free Report) , and WEX (WEX - Free Report) — are placed ahead of their first-quarter 2020 earnings releases on May 7.
Our quantitative model suggests that a company needs the right combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earlier too, our model did not predict a beat for the company when we issued our first-quarter earnings preview article as the stock had Earnings ESP of -33.74% and carried the same Zacks Rank.
Strength across the Research and Consulting segments is likely to have driven Gartner’s quarterly revenues, the Zacks Consensus Estimate for which stands at $1.04 billion, indicating year-over-year growth of 6.7%.
Rising expenses and loss from divested operations in 2019 are likely to have weighed on the company’s quarterly earnings, the consensus estimate for which is pegged at 33 cents per share, reflecting a year-over-year plunge of 43.1%.
Financial services technology provider Fiserv is also unlikely to beat estimates as it has an Earnings ESP of -0.74% and carries a Zacks Rank of 4, at present.
Previously, the model did not predict a beat when we issued our first-quarter earnings preview article. The stock then had an Earnings ESP of -1.77 and carried a Zacks Rank #3.
The Zacks Consensus Estimate for quarterly revenues stands at $3.57 billion, calling for a year-over-year surge of more than 100%. The top line is likely to have benefited from solid performance of First Data, card services, output solutions and some early network revenue-synergy benefits.
Revenue growth and operational effectiveness are likely to have boosted the company’s earnings, the Zacks Consensus Estimate for which is pegged at 99 cents per share, indicating year-over-year growth of 17.9%.
Business payments company FLEETCOR, with an Earnings ESP of +1.27% and a Zacks Rank of 3, is likely to beat on earnings this time around.
Earlier too, our model had predicted a beat for the company when we issued our first-quarter earnings preview article. Back then, the stock had an Earnings ESP of +0.03% and carried a Zacks Rank #3.
Strength across four product categories — fuel, corporate payments, lodging, and tolls — increased new sales and positive client retention trends are likely to have driven FLEETCOR's first-quarter revenues, the Zacks Consensus Estimate for which is pinned at $642.2 million, indicating an increase of 3.3% from the year-ago period reported figure.
Operational efficiency is likely to have aided the company’s bottom line, the Zacks Consensus Estimate for which is pegged at $2.8, calling for growth of 3.8% from the year-ago quarter reported figure.
FleetCor Technologies, Inc. Price and EPS Surprise
Financial services technology company Fidelity National Information Services is unlikely to beat on earnings as it has an Earnings ESP of 0.00% and currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for earnings is pegged at $1.27, indicating a year-over-year decline of 22.6%. The consensus mark for revenues stands at $3.1 billion, suggesting a year-over-year jump of 49.7%.
Fidelity National Information Services, Inc. Price and EPS Surprise
Corporate card payment solutions provider, WEX, with an Earnings ESP of -1.36% and a Zacks Rank of 4, is also not likely to beat on earnings this time around.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $2.03, calling for an increase of 18% from the prior-year reported figure. The consensus mark for revenues is pinned at $425.6 million, indicating year-over-year growth of 11.5%.
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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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Business Services Q1 Earnings on May 7: IT, FISV & More
Business Services has been majorly affected by the coronavirus pandemic, mainly due to its high dependency on economic activity. The pandemic has 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) has been decreasing. The PMI stood at 41.5%, 49.1% and 50.1% in April, March and February respectively, underscoring a contraction of economic activity in the manufacturing sector. The ISM-measured Non-Manufacturing Index (NMI) showed a similar trend and was 41.8%, 52.5% and 57.3% respectively in April, March and February, indicating contraction in the services sector as well.
However, since the virus outbreak started affecting businesses from the second half of March, its impact will be more pronounced in the June-end quarter results. 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 6.7% on 6.7% higher revenues (read more: Tech Sector Shows its Earnings Power).
So far, we have seen impressive quarterly results from sector participants like Equifax (EFX - Free Report) , Aptiv (APTV - Free Report) , Interpublic (IPG - Free Report) , S&P Global and Omnicom, each reporting better-than-expected top- as well as bottom-line numbers.
Glimpse of Some Upcoming Q1 Releases
Given this backdrop, let’s take a look at how the five business services companies — Gartner (IT - Free Report) , Fiserv , FLEETCOR , Fidelity National Information Services (FIS - Free Report) , and WEX (WEX - Free Report) — are placed ahead of their first-quarter 2020 earnings releases on May 7.
Our quantitative model suggests that a company needs the right combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Research and advisory company Gartner is unlikely to beat on earnings as it has an Earnings ESP of -36.75% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earlier too, our model did not predict a beat for the company when we issued our first-quarter earnings preview article as the stock had Earnings ESP of -33.74% and carried the same Zacks Rank.
Strength across the Research and Consulting segments is likely to have driven Gartner’s quarterly revenues, the Zacks Consensus Estimate for which stands at $1.04 billion, indicating year-over-year growth of 6.7%.
Rising expenses and loss from divested operations in 2019 are likely to have weighed on the company’s quarterly earnings, the consensus estimate for which is pegged at 33 cents per share, reflecting a year-over-year plunge of 43.1%.
Gartner, Inc. Price and EPS Surprise
Gartner, Inc. price-eps-surprise | Gartner, Inc. Quote
Financial services technology provider Fiserv is also unlikely to beat estimates as it has an Earnings ESP of -0.74% and carries a Zacks Rank of 4, at present.
Previously, the model did not predict a beat when we issued our first-quarter earnings preview article. The stock then had an Earnings ESP of -1.77 and carried a Zacks Rank #3.
The Zacks Consensus Estimate for quarterly revenues stands at $3.57 billion, calling for a year-over-year surge of more than 100%. The top line is likely to have benefited from solid performance of First Data, card services, output solutions and some early network revenue-synergy benefits.
Revenue growth and operational effectiveness are likely to have boosted the company’s earnings, the Zacks Consensus Estimate for which is pegged at 99 cents per share, indicating year-over-year growth of 17.9%.
Fiserv, Inc. Price and EPS Surprise
Fiserv, Inc. price-eps-surprise | Fiserv, Inc. Quote
Business payments company FLEETCOR, with an Earnings ESP of +1.27% and a Zacks Rank of 3, is likely to beat on earnings this time around.
Earlier too, our model had predicted a beat for the company when we issued our first-quarter earnings preview article. Back then, the stock had an Earnings ESP of +0.03% and carried a Zacks Rank #3.
Strength across four product categories — fuel, corporate payments, lodging, and tolls — increased new sales and positive client retention trends are likely to have driven FLEETCOR's first-quarter revenues, the Zacks Consensus Estimate for which is pinned at $642.2 million, indicating an increase of 3.3% from the year-ago period reported figure.
Operational efficiency is likely to have aided the company’s bottom line, the Zacks Consensus Estimate for which is pegged at $2.8, calling for growth of 3.8% from the year-ago quarter reported figure.
FleetCor Technologies, Inc. Price and EPS Surprise
FleetCor Technologies, Inc. price-eps-surprise | FleetCor Technologies, Inc. Quote
Financial services technology company Fidelity National Information Services is unlikely to beat on earnings as it has an Earnings ESP of 0.00% and currently carries a Zacks Rank of 3.
This stock had the same Earnings ESP and carried the same Zacks Rank when we issued our first-quarter earnings preview article.
The Zacks Consensus Estimate for earnings is pegged at $1.27, indicating a year-over-year decline of 22.6%. The consensus mark for revenues stands at $3.1 billion, suggesting a year-over-year jump of 49.7%.
Fidelity National Information Services, Inc. Price and EPS Surprise
Fidelity National Information Services, Inc. price-eps-surprise | Fidelity National Information Services, Inc. Quote
Corporate card payment solutions provider, WEX, with an Earnings ESP of -1.36% and a Zacks Rank of 4, is also not likely to beat on earnings this time around.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $2.03, calling for an increase of 18% from the prior-year reported figure. The consensus mark for revenues is pinned at $425.6 million, indicating year-over-year growth of 11.5%.
WEX Inc. Price and EPS Surprise
WEX Inc. price-eps-surprise | WEX Inc. Quote
Today's Best Stocks from Zacks
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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 >>