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ARC Document (ARC) to Post Q3 Earnings: What's in Store?

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ARC Document Solutions, Inc. ARC is slated to report third-quarter 2018 results on Nov 7, after the market closes.

The company pulled off a negative average earnings surprise of 25% over the preceding four quarters. However, ARC Document’s second-quarter 2018 adjusted earnings of 9 cents per share outpaced the Zacks Consensus Estimate of 6 cents by 50%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

ARC Document believes benefits from the newly-made organizational changes will continue to bolster its revenues and profitability in the quarters ahead. State-of-the-art technological solutions provided by the company (like SKYSITE cloud platform solutions) will likely secure increased demand from new customers. Strength in paper graphics, digital service, printing service and specialized color service businesses are also expected to support the upside. Moreover, investments made to expand market share will likely prove beneficial in the quarters ahead. However, the highly volatile Managed Print Services business remains a cause of worry for the company. ARC Document noted that efforts undertaken to implement the printing-optimization program and acquire new customers will not be conducive to the company's growth in the to-be-reported quarter.

Per ARC Document, improved revenues and operational excellence will continue to drive its profitability in the quarters ahead. However, outstanding medical claims might keep on denting its near-term margins. Flaring up extraordinary medical expenses, if unchecked, will persistently escalate ARC Document’s operating expenses, in turn, dampening its near-term profitability. In addition, prevailing weakness in printing volumes may hurt the company’s margins in the upcoming quarters.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as we will see below.

Earnings ESP: ARC Document Solutionshas an Earnings ESP of 0.00%. This is because the Zacks Consensus Estimate, as well as the Most Accurate Estimate for the company’s third-quarter 2018 earnings are both pegged at 1 cent per share.

ARC Document Solutions, Inc. Price and EPS Surprise


ARC Document Solutions, Inc. Price and EPS Surprise | ARC Document Solutions, Inc. Quote

Zacks Rank: ARC Document Solutions’favorable ZacksRank #3, when combined with an Earnings ESP of 0.00%, makes surprise prediction inconclusive.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the Zacks Industrial Products sector that you may want to consider, as our model shows that these have the right combination of elements to come up with an earnings beat:

Flowserve Corporation FLS has a Zacks Rank #2 and an Earnings ESP of +1.72%. You can see the complete list of today’s Zacks #1 Rank stocks here.

HD Supply Holdings, Inc. HDS has a Zacks Rank #2 and an Earnings ESP of +1.95%.

Kennametal Inc. KMT has a Zacks Rank of 2 and an Earnings ESP of +0.22%.

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Kennametal Inc. (KMT) : Free Stock Analysis Report
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