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Business Services Stock Earnings on Jul 30: FDC, BKI & More


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We are in the thick of the second-quarter earnings season, which is showing overall growth.

Per the latest Earnings Outlook , 217 S&P 500 companies (who collectively account for 54.1% of the index's total market capitalization) have already reported results. Total earnings of these companies increased 21.8% from the same period last year on 8.8% higher revenues, with 81.6% beating EPS estimates and 72.8% beating revenue estimates. Of these 217 companies, 63.1% beat both EPS and revenue estimates.

Total second-quarter 2018 earnings are expected to be up 22.3% on 8.4% higher revenues.

For full-year 2018, total earnings for the S&P 500 index are expected to be up 20.4% on 6.2% higher revenues.

What's in Store for Business Services?

Per the above report, stocks in the Business Services sector are expected to record top- and bottom-line growth of 6.3% and 15.8%, respectively. Notably, the sector is one of the 12 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth.

The outlook of the business services sector is highly dependent on the health of the broader economy, which is currently quite favorable. The U.S. economy is benefiting from Trump administration's business-friendly approach, including tax cuts, higher spending and repeal of regulations. This has improved the employment scenario and aided manufacturing and non-manufacturing activities.

The business services sector has performed well compared with the benchmark index year to date. The sector has gained 14%, which compares favorably with the Zacks S&P 500 Composite's rally of 7% in the said time frame. 

Stocks to Watch Out for Earnings on Jul 30

Given this bullish backdrop, investors interested in the business services stocks can watch out for four companies that are scheduled to report their quarterly numbers on Jul 30.

Based in Georgia, First Data Corporation FDC , a commerce-enabling technology and solutions company, will release second-quarter 2018 results. Currently, it has a Zacks Rank #3 (Hold). You can see  the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The Zacks Consensus Estimate for revenues is pegged at $2.19 billion, indicating an 18.3% increase year over year. The top line is expected to benefit from segmental strength, innovative product and services portfolio,expanding enterprise business and robust international presence. (Read more: First Data to Report Q2 Earnings: Is a Beat in Store? )

The consensus mark for earnings per share (EPS) in the to-be-reported quarter is pegged at 37 cents, indicating year-over-year decline of 7.5%. We believe normalization of adjusted effective tax rate and costs associated with acquisitions and agreements can weigh on the company's earnings. However, operating results are likely to improve.

First Data has a decent earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in only one of the previous four quarters and met the same in the remaining three quarters, delivering an average beat of 2.9%. Currently, the company has an Earnings ESP of +0.45%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

First Data Corporation Price and EPS Surprise

First Data Corporation Price and EPS Surprise | First Data Corporation Quote

Based in Florida, Black Knight, Inc. BKI is a leading provider of software, data and analytics solutions to the mortgage and consumer loan, real estate and capital market verticals. The company will report second-quarter 2018 results. Currently, it carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for adjusted revenues and earnings is pegged at $278.3 million and 44 cents per share, indicating year-over-year growth of 5.6% and 25.7%, respectively. We believe the company's focus on driving organic growth through cross-sell, addition of clients and delivery of innovative solutions will boost company's overall growth. Solid growth across reportable segments -Software Solutions Data and Analytics -is likely to act as another major tailwind for the company's performance.

Black Knight boasts an attractive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 4.1%. Currently, the company has an Earnings ESP of +2.30%.

Based in Virginia, Booz Allen Hamilton Holding Corporation BAH is a management and technology consulting service firm. This Zacks Rank #2 stock will release first-quarter fiscal 2019 results.

The Zacks Consensus Estimate for revenues and earnings is pegged at $1.58 billion and 58 cents per share, indicating year-over-year growth of 5.9% and 9.4%, respectively. The top line is expected to benefit from solid demand for Booz Allen services and solutions. The bottom line is likely to be driven by revenue growth, higher profits and impact of the new tax law.

Booz Allen Hamilton has an impressive earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in all the previous four quarters, delivering an average beat of 11.1%. The company has an Earnings ESP of 0.00%.

Booz Allen Hamilton Holding Corporation Price and EPS Surprise

Booz Allen Hamilton Holding Corporation Price and EPS Surprise | Booz Allen Hamilton Holding Corporation Quote

Based in California, TriNet Group, Inc. TNET is a leading provider of a comprehensive human resources solution for small to midsize businesses. This Zacks Rank #3 company will report second-quarter 2018 results.

The Zacks Consensus Estimate for net service revenues and earnings is pegged at $208.5 million and 67 cents per share, indicating year-over-year growth of 3.7% and 28.9%, respectively. The top line is expected to benefit from administrative cost savings, improved Worker's Compensation performance and solid customer acquisition. The bottom line is likely to benefit from improving operating performance.

Trinet has an impressive earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, delivering an average beat of 60.4%. The company has an Earnings ESP of +5.58%.

TriNet Group, Inc. Price and EPS Surprise

TriNet Group, Inc. Price and EPS Surprise | TriNet Group, Inc. Quote

What Does the Zacks Model Predict?

According to the Zacks model, a company with a Zacks Rank #1, 2 or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. We also don't recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.

The combination of a positive Earnings ESP and a favorable Zacks Rank makes us confident of an earnings beat for First Data, Black Knight and Trinet in the to-be-reported quarter.

However, we cannot predict an earnings surprise for Booz Allen Hamilton because its 0.00% Earnings ESP makes surprise prediction difficult, despite carrying a favorable Zacks Rank. 

Irrespective of an earnings beat or miss, investors are likely to focus on the companies' fundamentals while making investment decisions. Therefore, don't forget to check our full write up on earnings releases of these stocks later.

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First Data Corporation (FDC): Free Stock Analysis Report

TriNet Group, Inc. (TNET): Free Stock Analysis Report

Booz Allen Hamilton Holding Corporation (BAH): Free Stock Analysis Report

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

To read this article on Zacks.com click here.

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: FDC , TNET , BAH , BKI



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