The first-quarter 2020 reporting cycle for the Business Services sector commenced last week on a fairly positive note amid the coronavirus rampage. Since the virus outbreak started affecting businesses from the second half of March, its impact will be more evident in the second-quarter results.
Meanwhile, for this cycle, analysts are expecting a modest improvement in earnings from the sector. Total earnings are expected to be up 1.9% on 6.9% higher revenues (read more: Previewing Tech Sector Earnings).
Last week, we saw impressive quarterly results from Equifax EFX and Interpublic IPG, both reporting better-than-expected top- as well as bottom-line numbers. Robert Half RHI reported lower-than-expected earnings but higher-than-anticipated revenues.
Equifax is benefiting from its move to cloud-native tools that are driving collaboration as part of the company’s cloud technology and data transformation.
Interpublic continues to benefit from organic growth on strategic differentiation, strong go-to-market offerings and account wins.
Robert Half’s wholly-owned subsidiary, Protiviti, through which the company offers risk consulting, internal audit and information technology consulting services, remains strongly positioned in the market and a double-digit revenue performer.
Sneak Peek Into Upcoming Earnings Releases
Given this upbeat backdrop, let’s take a look at how the four business services companies — S&P Global SPGI, IQVIA Holdings IQV, TransUnion TRU and TriNet Group TNET — are placed ahead of their first-quarter 2020 earnings releases on Apr 28.
Our quantitative model suggests that a company needs the right combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ratings, benchmarks, analytics, and data provider S&P Global is unlikely to beat on earnings in the first quarter as it has an Earnings ESP of -0.68% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earlier too, our model did not predict a beat for the company when we had issued our first-quarter earnings preview article. Back then, the stock had an Earnings ESP of -1.05% and carried the same Zacks Rank.
However, the company’s earnings are anticipated to have benefited from revenue growth and productivity initiatives, the Zacks Consensus Estimate for which is pegged at $2.36 per share, indicating growth of 11.9% from the year-ago period reported figure. A solid segmental performance is likely to have driven revenues, the consensus estimate for which stands at $1.71 billion, indicating 8.6% year-over-year growth.
S&P Global Inc. Price and EPS Surprise
S&P Global Inc. price-eps-surprise | S&P Global Inc. Quote
Advanced analytics, technology solutions, and contract research services provider IQVIA is likely to beat on earnings in the to-be-reported quarter as it has an Earnings ESP of +0.02% and carries a Zacks Rank of 3, at present.
Previously, the model did not predict a beat when we had issued our first-quarter earnings preview article. The stock then had an Earnings ESP of 0.00% and carried the same Zacks Rank.
The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at $1.48, indicating a decline of 3.3% from the year-ago period reported figure. The consensus mark for revenues stands at $2.72 billion, indicating year-over-year growth of 1.2%.
IQVIA Holdings Inc. Price and EPS Surprise
IQVIA Holdings Inc. price-eps-surprise | IQVIA Holdings Inc. Quote
Risk and information solutions provider TransUnion is unlikely to beat on earnings as this Zacks #4 Ranked stock has an Earnings ESP of -3.40%.
The Zacks Consensus Estimate for earnings is pegged at 68 cents, indicating a year-over-year increase of 13.3%. The consensus mark for revenues stands at $678.8 million, indicating year-over-year growth of 9.6%.
TransUnion Price and EPS Surprise
TransUnion price-eps-surprise | TransUnion Quote
Human resources (HR) solutions provider, TriNet Group, with an Earnings ESP of -1.41% and a Zacks Rank of 3, is also not expected to beat on earnings this time around.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at 94 cents, indicating a decline of 4.1% from the year-ago period reported figure. The consensus mark for revenues is pinned at $250.8 million, indicating a year-over-year decline of 0.1%.
TriNet Group, Inc. Price and EPS Surprise
TriNet Group, Inc. price-eps-surprise | TriNet Group, Inc. Quote
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Equifax, Inc. (EFX) : Free Stock Analysis Report
Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report
Robert Half International Inc. (RHI) : Free Stock Analysis Report
TriNet Group, Inc. (TNET) : Free Stock Analysis Report
TransUnion (TRU) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
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