Technology

5 Business Services Stocks Up for Earnings Beat This Season

The third quarter witnessed the economy re-opening gradually with ease of restrictions, and both manufacturing and non-manufacturing activities getting a boost. Given its high dependency on economic activity, demand of services from the business services sector revived and stayed in a fairly healthy state during the July-September period.

Notably, economic activity in the service sector expanded 0.9% from August to September as the Services PMI measured by ISM touched 57.8%. This is the fifth consecutive month of expansion after April’s contraction that had interrupted an impressive growth rally of 131 consecutive months.

Although manufacturing activities edged down 0.6% from August to September, with the Purchasing Managers Index (PMI) measured by Institute for Supply Management (ISM) touching 55.4%, the reading stayed well above 50 — reflecting growth in the manufacturing sector. This is the fourth consecutive month of expansion after a two-month period of contraction that followed 122 straight months of expansion.

Q3 Tailwinds

Increasing adoption and success of the work-from-home model, rising demand for risk mitigation and consulting, and expertise to improve operational efficiency and reduce costs have boosted the demand environment for services like consulting, outsourcing, technology, business-information, advertising and marketing.

Further, gains witnessed in retail trade, professional and business services, leisure and hospitality, and education and health services aided the staffing space. Unemployment rate fell 0.5% in September and the number of unemployed persons decreased by 1 million to 12.6 million. Both metrics reflected a downside for the fifth straight month.

Selecting Stocks Poised to Beat

With the existence of a number of industry players, finding the right business services stocks that have the potential to beat earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.

You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

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

Our Choices

Provider of intelligent systems for wealth management and financial wellness Envestnet, Inc. ENV will report third-quarter 2020 results on Nov 5. The company has an Earnings ESP of +2.35% and currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Envestnet, Inc Price and EPS Surprise

Envestnet, Inc Price and EPS Surprise

Envestnet, Inc price-eps-surprise | Envestnet, Inc Quote

Provider of management and technology consulting, analytics, engineering, digital, mission operations, and cyber solutions Booz Allen Hamilton Holding Corporation BAH has an Earnings ESP of +3.64% and carries a Zacks Rank #3, at present. The company will announce second-quarter fiscal 2021 figures on Oct 30.

Booz Allen Hamilton Holding Corporation Price and EPS Surprise

Booz Allen Hamilton Holding Corporation Price and EPS Surprise

Booz Allen Hamilton Holding Corporation price-eps-surprise | Booz Allen Hamilton Holding Corporation Quote

Non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services provider Republic Services, Inc. RSG has an Earnings ESP of +1.93% and holds a Zacks Rank #3, currently. The company is scheduled to release quarterly numbers on Nov 5.

Republic Services, Inc. Price and EPS Surprise

Republic Services, Inc. Price and EPS Surprise

Republic Services, Inc. price-eps-surprise | Republic Services, Inc. Quote

Entertainment and technology solutions Everi Holdings Inc. EVRI will report third-quarter figures on Nov 2. The company has an Earnings ESP of +27.33% and presently carries a Zacks Rank #3.

Everi Holdings Inc. Price and EPS Surprise

Everi Holdings Inc. Price and EPS Surprise

Everi Holdings Inc. price-eps-surprise | Everi Holdings Inc. Quote

Zacks’ 2020 Election Stock Report:

In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.

Check out the 2020 Election Stock Report >>


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
 
Republic Services, Inc. (RSG): Free Stock Analysis Report
 
Envestnet, Inc (ENV): Free Stock Analysis Report
 
Booz Allen Hamilton Holding Corporation (BAH): Free Stock Analysis Report
 
Everi Holdings Inc. (EVRI): 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.

Latest Technology Videos

    Some of the Ways Video Is Changing How Business Is Being Done

    Brightcove Chief Marketing Officer Jennifer Smith discusses some of the ways video is changing how business is being done and key themes from Brightcove PLAY.

    Oct 6, 2021

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More