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Business Services Stock Q4 Earnings on Feb 13: WM, RSG & More

Zacks Equity Research

The Business Services sector was on a strong footing, driven by economic strength and stability that kept service activities in good shape in the fourth quarter. It was buoyed by a strong labor market, solid job growth and lower unemployment.

Notably, U.S. GDP grew at an annualized rate of 2.1% in fourth-quarter 2019, in line with growth in the third quarter, per estimates released by the Bureau of Economic Analysis. Further, December was the 119th month of consecutive growth in non-manufacturing activities, with the ISM-measured Non-Manufacturing Index touching 55%. Notably, a reading above 50 indicates growth.

Since business services firms have lower foreign exposure compared with goods companies and incur less foreign input costs, the industry was less affected by the trade war in the fourth quarter.

The Zacks Business Services sector currently carries a Zacks Sector Rank in the top 38% (6 out of 16 sectors). Additionally, we observe that the sector has performed well over the past year compared with the benchmark. It has gained 23.5%, outperforming the 20.8% rise of the Zacks S&P 500 composite.

 

WM, RSG, FIS, BKI and WEX in Spotlight

Given this encouraging backdrop, let’s delve deeper and analyze the factors that have likely influenced the performance of these five business services companies, scheduled to report fourth-quarter 2019 results on Feb 13.

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

Waste Management, Inc. WM: This Texas-based provider of waste management environmental services to residential, commercial, industrial, and municipal customers in North America is scheduled to report results, before market open.

The Zacks Consensus Estimate for revenues stands at $3.95 billion, indicating growth of 2.8% from the year-ago period’s reported figure. Increased yield in collection and disposal business, higher collection and landfill volume growth, and acquisitions are likely to have offset the weakness in the company’s recycling line of business.

The consensus mark for earnings is pegged at $1.17 per share, indicating growth of 3.5% from the year-ago period’s reported figure. Improved operating results, mainly in the collection and disposal business, are likely to have boosted Waste Management’s bottom line.

The company has an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, the beat being 3.8%, on average.

Encouragingly, our model predicts an earnings beat for Waste Management in the to-be-reported quarter, as it has an Earnings ESP of +2.90% and a Zacks Rank #2. (Read more: Waste Management to Post Q4 Earnings: What's in Store?)

Waste Management, Inc. Price and EPS Surprise

Republic Services, Inc. RSG: This Arizona-based provider of non-hazardous solid waste collection, transfer, recycling, disposal, and energy services in the United States and Puerto Rico is set to release results after market close.

The Zacks Consensus Estimate for revenues stands at $2.62 billion, indicating growth of 3.6% from the year-ago period’s reported figure. Strong pricing across the company’s collection, disposal and recycling processing businesses and positive impact of internal growth and acquisitions are likely to have driven Republic Services’ revenues in the fourth quarter.

The consensus mark for earnings per share is pegged at 89 cents, suggesting growth of 11.3% from the year-ago quarter’s reported figure. The company’s consistent efforts in managing costs and capitalizing on favorable solid waste trends helped it price in excess of cost inflation and expand operational efficiency, which in turn, is likely to have aided its bottom line.

Republic Services has an impressive earnings surprise history, having surpassed estimates in the trailing four quarters, the surprise being 3.1%, on average.

Encouragingly, our model predicts an earnings beat for Republic Services in the to-be-reported quarter, as it has an Earnings ESP of +2.67% and a Zacks Rank #2. (Read more: Is a Beat in Store for Republic Services' Q4 Earnings?)

Republic Services, Inc. Price and EPS Surprise

Fidelity National Information Services, Inc. FIS: This Florida-based financial services technology company is scheduled to report results before market open.

The Zacks Consensus Estimate for revenues is pegged at $3.33 billion, indicating growth of 53.8% from the year-ago quarter’s reported figure. The top line is likely to have benefited from organic revenue growth.

The consensus mark for earnings per share stands at $1.54, indicating decline of 3.8% year over year.

The company has an impressive earnings surprise history, having surpassed estimates in three of the trailing four quarters, the beat being 2.9%, on average.

Additionally, our model predicts an earnings beat for Fidelity this time around as it has an Earnings ESP of +0.30% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fidelity National Information Services, Inc. Price and EPS Surprise

Black Knight, Inc. BKI: This Florida-based provider of integrated software, data and analytics solutions to the mortgage and consumer loan, real estate, and capital market verticals in the United States is scheduled to report results after market close.

The Zacks Consensus Estimate for revenues is pegged at $299.98 million, indicating growth of 5% from the year-ago quarter’s reported figure. The top line is likely to have been driven by solid segmental growth.

The consensus mark for earnings per share stands at 48 cents, indicating decline of 4% year over year. The company’s indirect investment in The Dun and Bradstreet Corporation is likely to have weighed on its bottom line.

Black Knight has an impressive earnings surprise history, having surpassed estimates in the trailing four quarters, the beat being 4.3%, on average.

However, our model does not conclusively predict an earnings beat for Black Knight this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

Black Knight Financial Services, Inc. Price and EPS Surprise

WEX Inc. WEX: This Maine-based provider of corporate card payment solutions in North and South America, the Asia Pacific, and Europe is set to release results before the opening bell.

The Zacks Consensus Estimate for revenues is pegged at $456.08 million, indicating a 19.6% increase from the year-ago quarter’s reported figure. The top line is expected to have benefited from strength across each of the three segments — Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions and contributions from large North American oil company portfolios, new customer additions, and strategic acquisitions.

The consensus mark for earnings per share stands at $2.56, indicating an increase of 21.3% from the prior-year quarter’s reported number. Operational performance is likely to have aided the bottom line.

WEX has an impressive earnings surprise history, having surpassed estimates in three of the trailing four quarters, the beat being 0.9%, on average.

However, our model does not predict an earnings beat for WEX in the quarter to be reported, as it has an Earnings ESP of -0.32% and a Zacks Rank #4.

WEX Inc. Price and EPS Surprise

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Click to get this free report Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report Waste Management, Inc. (WM) : Free Stock Analysis Report Republic Services, Inc. (RSG) : Free Stock Analysis Report WEX Inc. (WEX) : Free Stock Analysis Report Black Knight Financial Services, Inc. (BKI) : Free Stock Analysis Report To read this article on Zacks.com click here.