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5 Great Business Services Stocks to Buy Ahead of Q2 Earnings


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As investors continue to grapple with trade tensions, they may well forget that the economy remains on a firm footing. Fresh evidence of this fact was provided by the official jobs report for June. Job additions came in above 200,000, defying predictions that gains would decline as the economy nears full employment.

Incidentally, professional and business services contributed the highest number of jobs. Further, earnings and revenues from the sector are likely to improve in the first quarter, which makes it a good idea to pick up select business services stocks that are also slated to outperform their earnings estimates.

Professional and Business Services Lead Job Additions

In June, job additions, came in at 213,000, according to the Department of Labor. The figure exceeded the consensus estimate of 196,000. Notably, monthly job additions have averaged 200,000 over the past one year. Job additions for April and May were revised upward by a combined 37,000.

Professional and business services accounted for the highest number of job additions. At 50,000, the figure is much higher than the number of jobs added by manufacturing, healthcare and construction, which totaled 36,000, 25,000 and 13,000, respectively. (Read : Profit From Strong Job Additions With These 5 Top-Ranked Picks )

This is yet another indicator of the growing importance of the business services sector, particularly in the United States and the greater North American region. According to the Professional Services Global Market Report for 2018, North America contributed 37% to total demand for professional services in 2017.

This was likely due to huge demand for legal, accounting and other professional services across all major business sectors. (Read: 5 Great Business Services Stocks to Buy Ahead of Q1 Earnings )

Resilient Economy, Trump's Policies to Aid Sector

Currently, the U.S. economy is on a firm footing with stable GDP levels, a robust employment scenario and inflation hitting 2%. The Trump administration remains focused on improving the ease of doing business, exemplified by its tax cuts. It is widely expected that the government will pursue its agenda of deregulation aggressively.

Moreover, total Q2 earnings for the business services sector are expected to be up 15.6% on 5.5% higher revenues as of Jul 13, 2018. That's far better than the more vaunted autos and conglomerates sectors, earnings for which are expected to decline by 9.4% and 12.6%, respectively during the second quarter.

Overall, total Q2 earnings are expected to be up 19.5% from the same period last year on 8.2% higher revenues. (Read: Market Unimpressed with Bank Earnings )

Our Choices

The Trump administration's business friendly approach and a strong economy are likely to provide a major boost to the business services sector in the months ahead. Taken together, these factors ensure that business services stocks remain a strong investment option in 2018.

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our  Earnings ESP Filter .

You could further narrow down the list of choices by looking at stocks that have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see  the complete list of today's Zacks #1 Rank stocks here .

Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

WNS (Holdings) LimitedWNS is a business process outsourcing company which offers data, voice, business transformation and analytical services across the globe.

WNS (Holdings) has beaten the Zacks Consensus Estimate for earnings in each of the last four quarters, with an average positive earnings surprise of 12.7%.

Powered with the right combination of the two key ingredients - an Earnings ESP of +1.82% and a Zacks Rank of 2 - our proven model shows that an earnings beat is likely for WNS (Holdings) in the to-be-reported quarter as well.

The company is expected to report fiscal first-quarter 2019 results on Jul 19.

IQVIA Holdings Inc.IQV is a provider of information, innovative technology solutions and contract research services focused on using data and science, which offer healthcare clients find better solutions for their patients.

IQVIA Holdings has beaten the Zacks Consensus Estimate for earnings in each of the last four quarters, with an average positive earnings surprise of 4.3%.

Powered with the right combination of the two key ingredients - an Earnings ESP of +0.25% and a Zacks Rank of 2 - our proven model shows that an earnings beat is expected for IQVIA Holdings in the to-be-reported quarter as well.

The company is expected to report second-quarter 2018 results on Jul 24.

WEX Inc.WEX provides physical, digital and virtual corporate card payment solutions.

WEX has surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 2.6%.

Powered with the right combination of the two key ingredients - an Earnings ESP of +0.74% and a Zacks Rank of 2 - our proven model shows that an earnings beat is expected for WEX in the to-be-reported quarter as well.

The company is expected to report second-quarter 2018 results on Jul 26.

Blucora, Inc.BCOR provides technology-enabled financial solutions to consumers, small businesses and tax professionals.

Blucora surpassed the Zacks Consensus Estimate the last four quarters, with an average positive earnings surprise of 29.6%.

Powered with the right combination of the two key ingredients - an Earnings ESP of +1.18% and a Zacks Rank of 1 - our proven model shows that an earnings beat is expected for Thomson Reuters in the to-be-reported quarter as well.

The company is expected to report second-quarter 2018 results on July 26.

Black Knight, Inc.BKI engages in the provision of integrated technology, workflow automation and data and analytics to the mortgage and real estate industries, through its subsidiaries.

Black Knight beat the Zacks Consensus Estimate in the last four quarters, with an average positive earnings surprise of 4.1%.

Powered with the right combination of the two key ingredients - an Earnings ESP of +2.30% and a Zacks Rank of 2 - our proven model shows that an earnings beat is expected for Black Knight in the to-be-reported quarter as well.

The company is expected to report second-quarter 2018 results on Jul 30.

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WNS (Holdings) Limited (WNS): Free Stock Analysis Report

Blucora, Inc. (BCOR): Free Stock Analysis Report

WEX Inc. (WEX): Free Stock Analysis Report

Black Knight Financial Services, Inc. (BKI): Free Stock Analysis Report

IQVIA Holdings Inc. (IQV): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: WNS , BCOR , WEX , BKI , IQV



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