Global electronic payment processor -
Total System Services Inc.
) is scheduled to release its first-quarter 2014 financial
results after the closing bell on Apr 22.
In the last reported fourth-quarter 2013, the company
delivered a 2.2% negative earnings surprise, while the
four-quarter trailing average beat is pegged at mere 0.02%. Let's
see how things are shaping up for this announcement.
Factors that Seek Attention
Total System benefits from a diversified portfolio, strategic
acquisitions, alliances and technical competence - factors that
are expected to consistently drive long-term growth. However, a
decelerated capital deployment and a tepid earnings guidance
restricts the desired upside from current levels in near
Growth outlook for operating margins in 2014 appears stressful
and indefensible given additional expenses related to the
NetSpend acquisition. Operating margins also underperformed the
guidance in 2013. This is also reflected in management's growth
projection of operating earnings per share in the band of 11-13%
in 2014, which is noticeably lower than 18% growth recorded in
Meanwhile, the hike in total debt ($1.46 billion at 2013-end
against $202.2 million at 2012-end) also augments borrowing
costs, further deteriorating the debt leverage. This, along with
lower cash flow outlook, deters share buybacks, overall raising
caution regarding an earnings beat.
Our proven model shows that Total System is unlikely to beat
earnings as it lacks the required combination of two key
: Total System has a negative Zacks ESP. That is because Expected
Surprise Prediction or
, which represents the difference between the Most Accurate
estimate of 39 cents per share and the Zacks Consensus Estimate
of 40 cents, is -2.5%.
: Total System has a Zacks Rank #3 (Hold). Note that stocks with
Zacks Rank #1, 2 and 3 have significantly higher chances of
beating earnings. Sell-rated stocks (#4 and 5) are kept under the
radar and are never considered going into the earnings
The combination of Total System's Zacks Rank #3 and -2.5% ESP
deter us from being confident of an earnings beat on Apr 22.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this coming quarter:
), earnings ESP of +1.8% and a Zacks Rank #1 (Strong Buy).
Portfolio Recovery Associates Inc.
), earnings ESP of +2.33% and a Zacks Rank #2 (Buy).
CBOE Holdings Inc.
), earnings ESP of +3.70% and a Zacks Rank #3 (Hold).
CBOE HOLDINGS (CBOE): Free Stock Analysis
LAZARD LTD (LAZ): Free Stock Analysis Report
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
TOTAL SYS SVC (TSS): Free Stock Analysis
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