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ASGN to Post Q3 Earnings: What's in the Cards for the Stock?

Zacks Equity Research

ASGN Incorporated ASGN is set to report third-quarter 2019 results on Oct 23.

The company’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters and missed it on other three occasions, the average positive surprise being 1.93%.

For the third quarter, ASGN expects revenues between $993 million and $1.003 billion, indicating 9.5-10.7% growth from the year-ago reported figure.

The Zacks Consensus Estimate for the same stands at $998.7 million, suggesting a 10.2% increase from the year-earlier reported figure.

The consensus estimate for earnings of $1.23 has been flat ahead of the company’s earnings release.

A Look at Q2 Results

In the last reported quarter, the company’s earnings per share of $1.1 lagged the Zacks Consensus Estimate of $1.19 as well as the year-ago quarterly figure of $1.3.

ASGN’srevenues rose 10.7% year over year to $972.3 million and also surpassed the Zacks Consensus Estimate of $972 million.

ASGN Incorporated Price and EPS Surprise

ASGN Incorporated Price and EPS Surprise

ASGN Incorporated price-eps-surprise | ASGN Incorporated Quote

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

ASGN’s third-quarter results are likely to have been driven by the Apex segment, which has been consistently performing well over the last few quarters. Robust performance of the company’s commercial top account portfolio and a consistently high-growth rate in IT consulting services are likely to have remained key drivers.

Moreover, growing demand for delivery of AI and cloud-based solutions and services to Defense, Federal, state and commercial customers is boosting its ECS revenues. Also, steady solid demand for secure but unclassified, network and operational enclaves delivering key technical solutions and services is a positive.

Additionally, the company’s acquisition of DHA Group in January is bumping up its ECS revenues. In the last reported quarter, DHA contributed $15.6 million, a trend that most likely continued in the period to be reported.

However, slowdown in the permanent placement business is likely to have kept the Oxford segment under pressure.

Further, softness in permanent-placement revenues coupled with the addition of lower-margin DHA business might reflect on the company’s gross margin.

What Our Model Says
    
The proven Zacks model does not conclusively predict an earnings beat for ASGN. The combination a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ASGN carries a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of -0.27% makes surprise prediction difficult.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Arrow Electronics, Inc. ARW has an Earnings ESP of +0.60% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, Inc. AVT has an Earnings ESP of +2.68% and is Zacks #3 Ranked.

DHI Group, Inc. DHX has an Earnings ESP of +9.09% and is a #3 Ranked player.

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