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4 Business Services Stocks Set to Top Q3 Earnings Estimates

Zacks Equity Research

The Zacks Business Services sector is one of the six (out of the total 16) Zacks sectors expected to register earnings growth in third-quarter 2019, per the latest Earnings Preview report. The sector is anticipated to record earnings growth of 7% on 10.5% higher revenues in the current reporting cycle.

Year to date, the sector has performed well compared with the benchmark index. It has gained 26% compared with the Zacks S&P 500 composite’s rise of 21.3% in the said time frame. It currently carries a Zacks Sector Rank in the top 38% (6 out of 16 sectors).

Driving Factors

The sector is expected to have benefited from economic strength and stability, and robust service activities in the third quarter. It remained buoyed by a strong labor market and low unemployment and inflation.

Notably, U.S. GDP grew at an annualized rate of 2% in second-quarter 2019 per the “second” as well as the "third" estimate released by the Bureau of Economic Analysis. The Fed expects GDP growth of 2.2% in the third quarter and 2.1% in 2019. September was the 116th month of consecutive growth in non-manufacturing activities with ISM-measured Non-Manufacturing Index touching 52.6%.

Further, the sector remained less affected by severe trade tensions in the quarter as business services firms have lower foreign exposure compared with goods companies and incur lower foreign input costs.

Zeroing in on Winners

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

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. The selection can be done with the help of the Zacks Stock Screener. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Business Services Stocks That Match the Criteria

Ratings, benchmarks, analytics, and data provider to the capital and commodity markets, S&P Global Inc. SPGI has an Earnings ESP of +1.72% and carries a Zacks Rank #2. The company is slated to report results on Oct 29. You can see the complete list of today’s Zacks #1 Rank stocks here.

S&P Global Inc. Price and EPS Surprise

S&P Global Inc. Price and EPS Surprise

S&P Global Inc. price-eps-surprise | S&P Global Inc. Quote

Music streaming services provider Spotify Technology S.A. SPOT has an Earnings ESP of +26.98% and carries a Zacks Rank #3. The company is scheduled to release results on Oct 28.

Spotify Technology SA Price and EPS Surprise

Spotify Technology SA Price and EPS Surprise

Spotify Technology SA price-eps-surprise | Spotify Technology SA Quote

The Earnings ESP for financial services technology provider Fiserv, Inc. (FISV) is +3.36% and it carries a Zacks Rank of 3. The company is scheduled to report on Nov 6.

Fiserv, Inc. Price and EPS Surprise

Fiserv, Inc. Price and EPS Surprise

Fiserv, Inc. price-eps-surprise | Fiserv, Inc. Quote

Data analytics solutions provider Verisk Analytics, Inc. VRSK will report results on Oct 29. The company has an Earnings ESP of +2.22% and a Zacks Rank #3.

Verisk Analytics, Inc. Price and EPS Surprise

Verisk Analytics, Inc. Price and EPS Surprise

Verisk Analytics, Inc. price-eps-surprise | Verisk Analytics, Inc. Quote

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S&P Global Inc. (SPGI) : Free Stock Analysis Report
 
Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report
 
Fiserv, Inc. (FISV) : Free Stock Analysis Report
 
Spotify Technology SA (SPOT) : Free Stock Analysis Report
 
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