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Business Services Q3 Earnings on Oct 25: SPGI, RSG, NLSN

The third-quarter earnings season has kicked off with 84 S&P 500 companies (collectively accounting for 22.3% of the index's total market capitalization) having already reported their quarterly numbers as of Oct 19. Per the latest Earnings Preview , total earnings of these 84 companies increased 19.2% from the same period last year on 8.4% higher revenues, with 82.1% beating EPS estimates and 61.9% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 54.8%.

Per the above report, the top and the bottom lines (in the S&P 500 Index) are likely to improve 7.2% and 19.2%, respectively at the end of the reporting cycle.

Business Services Sector on Growth Path

The Zacks Business Services sector is one of the 10 sectors (out of the total 16 Zacks sectors) expected to record double-digit earnings growth this quarter. According to our latest projections, the sector's earnings are on track to rise 10.8% year over year in third-quarter 2018 on the back of 3.8% rise in revenues.

The buoyancy in the sector is further confirmed by its Zacks Sector Rank in the top 44% (7 out of 16 sectors). Additionally, we observe that the sector has performed well in the past year compared with the benchmark. It has gained 12.6%, outperforming the 8.3% rise of the Zacks S&P 500 Composite Index.

The outlook of the business services sector is 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 and higher government spending. This has improved the employment scenario and aided manufacturing and non-manufacturing activities.

Key Releases on Oct 25

Investors interested in business services stocks can watch out for three companies that are scheduled to report their third-quarter 2018 numbers on Oct 25.

According to the Zacks model, a company needs the right combination of two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better - to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

We do not recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.

Based in New York, S&P Global Inc.SPGI provides independent ratings, benchmarks, analytics, and data to capital and commodity markets worldwide.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.58 billion, indicating a 4.6% increase year over year. The top line is expected to benefit from growth across S&P Global Ratings ("Ratings") and S&P Dow Jones Indices ("Indices") segments. (Read more: S&P Global to Report Q3 Earnings: What's in Store? )

The consensus estimate for earnings is pegged at $2.01 per share, indicating year-over-year growth of 17.5%. Lower tax rates (as a result of Tax Cuts and Jobs Act), revenue growth and operating performance are likely to boost S&P Global's bottom line.

S&P Global boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 7.2%.

However, the company has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

S&P Global Inc. Price and EPS Surprise

S&P Global Inc. Price and EPS Surprise | S&P Global Inc. Quote

Based in Arizona, Republic Services, Inc.RSG provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $2.56 billion, indicating a marginal improvement from the year-ago quarter's figure. The top line is likely to benefit from internal revenue growth and contribution from acquisitions. The Zacks Consensus Estimate indicates a positive impact of 2.05% due to internal growth and 2.11% from acquisitions.Strength across the company's line of business - Collection, Transfer, Landfill and Energy Services - should also drive the top line. (Read more: Republic Services Q3 Earnings: What's in the Cards? )

The consensus mark for earnings is pegged at 81 cents per share, indicating year-over-year growth of 20.9%. Lower tax rate (as a result of Tax Cuts and Jobs Act) is likely to boost the bottom line.

Republic Services has an impressive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 5.2%.

Currently, the company has a Zacks Rank #3 and an Earnings ESP of -0.31%, which makes surprise prediction difficult.

Republic Services, Inc. Price and EPS Surprise

Republic Services, Inc. Price and EPS Surprise | Republic Services, Inc. Quote

Based in the United Kingdom, Nielsen Holdings plcNLSN operates as an information and measurement company.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.58 billion, indicating year-over-year decrease of 3.9%. The top line is expected to be hurt by continued weakness in the company's Buy segment, which is likely to be partially offset by growth in the Watch segment.

The Buy segment remains exposed to increasing challenges in the growing consumer goods environment. Declining revenues across Buy Emerging Markets, Developed Markets and Corporate Buy is expected to harm segmental revenues. On the flip side, the Watch segment is likely to get a boost from the rise in Audience Measurement of Video and Text revenues.

The consensus estimate for earnings is pegged at 53 cents per share, indicating year-over-year decrease of 14.5%. The bottom line is expected to be hurt by softer revenues, higher restructuring charges, retailer investments and continuous investments in the Buy and Watch segments, which is likely to be partly offset by productivity and other growth initiatives.

Nielsen has a disappointing earnings surprise history, having lagged estimates in each of the trailing four quarters, with an average negative surprise of 26.8%.

The company has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read more: Nielsen Q3 Earnings: Is Disappointment in Store? )

Nielsen Holdings Plc Price and EPS Surprise

Nielsen Holdings Plc Price and EPS Surprise | Nielsen Holdings Plc Quote

Upcoming Releases

Investors interested in the broader Business Services sector are also awaiting earnings reports of key players like Booz Allen Hamilton Holding BAH , Waste Connections WCN and First Data FDC . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29. Waste Connections and First Data will release third-quarter 2018 results on the same day.

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First Data Corporation (FDC): Free Stock Analysis Report

Nielsen Holdings Plc (NLSN): Free Stock Analysis Report

S&P Global Inc. (SPGI): Free Stock Analysis Report

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

Republic Services, Inc. (RSG): Free Stock Analysis Report

Waste Connections, Inc. (WCN): Free Stock Analysis 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.


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

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