Zacks Industry Outlook Highlights: Western Union, MoneyGram International, Xerox and MITIE Group

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For Immediate Release

Chicago, IL - February 16, 2017 - Today, Zacks Equity Research discusses the Industry: Business Services, Part 3, including Western Union Company (NYSE: WU - Free Report ), MoneyGram International Inc. (NASDAQ: MGI - Free Report ), Xerox Corporation (NYSE: XRX - Free Report ) and MITIE Group PLC. (OTCMKTS: MITFY - Free Report ).

Industry: Business Services, part 3


Despite the positives in the Business Services, we cannot ignore the headwinds limiting the positive impact of the catalysts mentioned in " Business Services Stocks to Gain from Improving Employment ."

Discussed below are some inherent challenges faced by the Business Services sector:

Continuous Spending on Research and Development: Importantly, consulting service providers need to stay abreast with the latest technologies through continuous spending on research and development. The performance of these providers can be hampered if they do not acclimatize to or adopt new services to cope with the latest developments.

Maintaining Skilled Workforce Involves High Costs : Since skilled workers are always in demand, there is a possibility of a high turnover rate in the sector. The training of unskilled workers or taking in new skilled workers increases operational costs, and thus affects margins. This space needs to have a more skilled workforce to take advantage of technology that develops at a rapid pace.

Competition: Maintaining or increasing market share remains challenging for business service providers. As discussed earlier, the main business of one company can be a business service for another. So target customers for both may at times be the same.

Therefore, a business service provider is always required to be adequately equipped to win over customer demand. While larger providers bank on the broad variety of service offerings and can effectively take up difficult ventures, the relatively smaller players compete in an industry backed by specialized services.

Regulatory Hurdles : By virtue of having operations across the globe, service providers face regulatory hurdles and compliance-related issues. The Western Union Company (NYSE: WU - Free Report ) expects compliance costs to be at the higher end of 3.5-4% in 2017.

Moneygram International Inc. (NASDAQ: MGI - Free Report ) is being probed by a federal grand jury in relation to its consumer anti-fraud and anti-money laundering program matters for 2003 to early 2009, among many other government investigations and litigations. Any adverse results from the investigation might lead to potential liability against damages, which could put pressure on margins and cash flows.

Based on an unfavorable Zacks Rank and downward estimate revision, we prefer to avoid Xerox Corporation (NYSE: XRX - Free Report ) and MITIE Group PLC. (OTCMKTS: MITFY - Free Report ). Each of these stocks carries a Zacks Rank #5 (Strong Sell).

The Trump Administration's policy orientation is towards discouraging offshoring and outsourcing. It is not clear what measures the new administration will implement, but it is reasonable to expect incremental headwinds for consulting and outsourcing firms in the coming days.

You can see the complete list of today's Zacks #1 Rank stocks here .

To Conclude

The dearth of skilled labor in the business services sector can affect its prospects. Non-availability of quality workforce at a reasonable rate might increase overall operational costs.

In addition, due to the highly fragmented nature of the industry, it is difficult to set a distinct trend or predict a concrete future for it.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

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Western Union Company (The) (WU): Free Stock Analysis Report

Moneygram International, Inc. (MGI): Free Stock Analysis Report

Xerox Corporation (XRX): Free Stock Analysis Report

Mitie Group PLC. (MITFY): 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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