For Immediate Release
Chicago, IL - June 07, 2017 - Today, Zacks Equity Research discusses the Industry: Business Services, Part 1, including National Resource Corp. (NASDAQ: NRCIA - Free Report ), Recruit Holdings Co., Ltd. (OTCMKTS: RCRRF - Free Report ), Brink's Company (NYSE: BCO - Free Report ), StarTek, Inc. (NYSE: SRT - Free Report ) and Kelly Services, Inc. (NASDAQ: KELYA - Free Report ).
Industry: Business Services, Part 1
The business services sector includes companies that provide ancillary services to other industries in the market. Companies from this sector help other firms focus on their core competencies and enjoy competitive advantages, aiding margin expansion and the capture of higher market share. This, in turn, boosts the operations of these business services companies.
Notably, business services account for an ever-growing portion of a country's gross domestic product (GDP) as the economy shifts over time from agriculture to industry and even business services. Therefore, the sector plays a major role in any country's overall development.
Fortunes of the sector are closely linked to the health of the U.S. and global economy. The outlook for the U.S. economy remains favorable, with the policy expectations from the Trump administration looking to give the growth trajectory a positive nudge. These include increased government spending on infrastructure and defense, tax reforms and business-friendly regulations.
Economic sensitivity aside, business service companies are quite conservatively managed, with a large number of players sharing excess cash with investors through dividends and share buybacks.
Nonetheless, the business service sector is highly fragmented, with no single service provider enjoying market dominance. Per business reports, the top 50 companies of the sector contribute less than 25% to the overall revenue. However, given the group's unique nature, Zacks has classified it as one of the 16 sectors (the S&P's official GIC classification has only 10 sectors where business services are grouped within the 'Industrials' sector). Notably, with about 3.4% of total market capitalization, the sector generated 2.8% the total income in 2016.
Stand-Alone Zacks Sector
This industry offers an array of services that include marketing, consulting, staffing, security, telecommunications, Internet services, logistics and waste handling. In its expanded sense, the U.S. business services sector generates consolidated yearly revenues of about $620 billion, though many of these companies do not strictly fall within the generally accepted definition of the industry.
Within the Zacks Industry classification, we have divided the business world into 16 sectors comprising 60 industries at the medium or M-level and 256 industries at the expanded or X-level. We rank all 256 X-level industries in the 16 sectors based on the earnings outlook of the constituent companies in each industry. This ranking is available in the Zacks Industry Rank page .
The way to align the ranking and outlook from the complete list of Zacks Industry Rank for the 252+ industries is by dividing it into positive, neutral and negative categories depending on the Zacks Rank. The outlook for the top one-third of the list (Rank of #88 and lower) is positive, the middle one-third of the list (Rank of #89 to #176) is neutral, and for the bottom one-third (Rank #177 and higher) is a clear negative.
Please note that the Zacks Rank for stocks - the core of our Industry Rank - has an impressive track record, verified by outside auditors, to foretell stock prices, in particular over the short term (one to three months). We have eight X-level industries within the Business Services sector, namely Auction/Valuation Services, Business Information Services, Business Services, Consulting, Financial Transaction Services, Outsourcing, Staffing and Waste Removal Services.
Outsourcing at #40, Business Information Services at #55, Waste Removal at #61 and Staffing at #63 are industries that fall in the upper one-third and have a positive outlook.
Consulting at #98 and Financial Transaction Services at #101 are positioned in the mid one-third of all Zacks industries and have a neutral outlook.
Business Services at #193 and Auction/Valuation Services at #206 are the ones that fall in the lower one-third and have a negative outlook.
This points to positive to neutral outlook for the business services sector overall. The sector is currently ranked 6 th of the 16 Zacks sectors. You can see the Business Service sector's placement on our sector heat map here >>>
Our top picks from Business Information Services are National Resource Corp. (NASDAQ: NRCIA - Free Report ) and Recruit Holdings Co., Ltd. (OTCMKTS: RCRRF - Free Report ), both of which carry a Zacks Rank #1 (Strong Buy).
The Brink's Company (NYSE: BCO - Free Report ) and StarTek, Inc. (NYSE: SRT - Free Report ) from Outsourcing have Zacks Rank #1s, and are our top picks in that group.
We favor Kelly Services, Inc. (NASDAQ: KELYA - Free Report ), sporting a Zacks Rank #1, in the Staffing industry.
You can see the complete list of today's Zacks #1 Rank stocks here .
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report National Research Corporation (NRCIA): Free Stock Analysis Report Recruit Holdings Co., Ltd. (RCRRF): Free Stock Analysis Report Brink's Company (The) (BCO): Free Stock Analysis Report StarTek, Inc. (SRT): Free Stock Analysis Report Kelly Services, Inc. (KELYA): Free Stock Analysis Report To read this article on Zacks.com click here.