As the U.S. enters the 14th day of a partial government shutdown
from a budget deadlock, the entire world is awaiting a last-minute
deal to end the debt ceiling stalemate in order to avert the risks
of a sovereign downgrade and a global financial market crash. With
furloughs of 350,000 federal workers, each week of the government
shutdown is estimated to impair annualized economic growth of an
already-volatile economy by 0.12 percentage points.
Amid such precarious conditions, most companies in the Business
Services industry would aim to reduce their spending, until at
least a clear picture of the economy unfurls. The primary growth
drivers in this highly fragmented industry involve a healthy
economy with a decent job growth, higher disposable income and new
business arrangements. An ideal mix of services, effective
marketing strategies and ability to retain and attract new
customers serve the perfect recipe for profitability for most of
The current market conditions remain unfavorable for the industry
as budgetary constraints curtail discretionary spending, reducing
marketing expenses and deferring new business initiatives.
Concurrently, most companies in the industry would prefer to hold
their budgetary strings and wait until the storm is over.
Given this scenario, it might be a good idea to zero-in on a
handful Business Services stocks that are poised to beat earnings
estimates this quarter. An earnings surprise should help these
stocks outperform in the near term, and possibly outperform
How to Pick?
Amid a diverse range of companies in the Business Services arena,
picking the right stock for your portfolio could appear to be a
colossal task. An easy way to narrow down the list is to look at
stocks that have a solid Zacks Rank and a favorable Zacks
Earnings ESP is our proprietary methodology for determining which
stocks have the best chance to surprise with their next earnings
announcement. The Earnings ESP shows the percentage difference
between the Most Accurate Estimate and the Consensus.
The combination of a positive to neutral Zacks Rank-- Zacks
Rank #1 (Strong Buy) or #2 (Buy) or #3 (Hold)-- and a positive
Earnings ESP, is usually a harbinger of earnings beat and serves a
perfect success formula on a platter in this challenging
macroeconomic environment. For investors seeking to benefit by
applying this strategy to their portfolios, we have mentioned three
Business Services stocks below which match these criteria, and thus
may be the potential winners this earnings season:
): Headquartered in Milwaukee, Wis., ManpowerGroup provides
workforce solutions and services through a network of approximately
3,500 offices in 80 countries across various industry sectors, and
small and medium-sized enterprises. The company specializes in
temporary and permanent recruitment, career management, outsourcing
and HR consulting services.
The company is anticipating strong quarterly earnings, which is
expected to be up 36.87% year over year with Zacks Consensus
Estimate being pegged at $1.08. Analysts have been moving their
quarterly and full year estimates higher of late, further
suggesting a solid earnings momentum in the imminent quarters.
ManpowerGroup currently carries Zacks Rank #1 along with an
Earnings ESP of +2.78%. The company is expected to report its third
quarter 2013 results before the opening bell on Oct 21.
McGraw Hill Financial, Inc.
): N.Y.-based McGraw Hill offers credit ratings, benchmarks, and
analytics to capital and commodity markets across the globe that
empowers clients with essential intelligence to mitigate risk and
identify opportunities to grow. The company houses some of the most
iconic brands in finance and business that include Standard &
Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones
Indices, Platts, J.D. Power, and McGraw Hill Construction.
The company has a long-term earnings expectation of 17.2%. Analysts
have been moving their full year estimates higher for the stock,
further implying a healthy earnings momentum in the imminent
McGraw Hill currently has Zacks Rank #2 along with an Earnings ESP
+3.90%. The company is expected to report its third-quarter 2013
results before the market opens on Oct 22.
): Headquartered in Brookfield, Wis., Fiserv offers global
technology services to the financial services industry. The company
provides integrated technology and services for more than 16,000
clients worldwide, including banks, credit unions and thrifts,
billers, mortgage lenders and leasing companies, brokerage and
investment firms and other business clients.
The company is anticipating strong third quarter earnings, which is
expected to increase 19.2% year over year with Zacks Consensus
Estimate being pegged at $1.51. Analysts have revised their
quarterly and full year estimates upward, which further signify a
solid earnings momentum for the company.
Fiserv currently has Zacks Rank #1 along with an Earning ESP of
+1.99%. The company is expected to report its third-quarter 2013
results after the closing bell on Oct 29.
The ramifications of a potential crisis due to a debt-ceiling
impasse may severely affect the economy unless a balanced fiscal
policy is eked out. As the U.S. stocks look for a survival
strategy, a sneak peek to the space for some possible outperformers
backed by a solid Zacks Rank and a positive Zacks Earnings ESP
could be a great idea for investors looking to profit this
FISERV INC (FISV): Free Stock Analysis Report
MANPOWER INC WI (MAN): Free Stock Analysis
MCGRAW HILL FIN (MHFI): Free Stock Analysis
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