Business Services Stock Earnings Due on Apr 19: EXPO & ADS

We are in the first week of the Q1 reporting cycle and only a handful of the S&P 500 players have released their quarterly numbers so far. In fact, this reporting cycle has started on a solid note, courtesy of better-than-expected results from big names in the banking space like JPMorgan JPM and Wells Fargo WFC.

Bullish Q1 Views

Per the latest Earnings Preview, the bottom line for S&P 500 companies is expected to expand at an impressive rate of 16.6% on a year-over-year basis. Total revenues for the same set of companies are projected to grow 7.5%. The report further predicts that 14 of the 16 Zacks sectors will end the Q1 earnings season with the bottom line improving year over year. Of which, 11 are anticipated to exhibit double-digit earnings growth.

Strong Expectations From Business Services

Earnings prospects in Q1 are encouraging with the Business Services Sector expected to be up 10.7% from the year-earlier level on 4.8% higher revenues.

Usually, the sector is directly proportional to the broader economy, which is currently quite favorable. In fact, a rise in GDP, record-low unemployment level, strong job additions, easing of the U.S. dollar and momentum in oil prices are all signs of improvement in the U.S. economy, which in turn should boost the business service sector. Trump’s business-friendly policies, including tax cuts, and repeal of regulations are additional tailwinds.

Stocks to Watch for Earnings on Apr 19

Exponent EXPO is a science and engineering consulting company. The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at 62 cents, reflecting a massive improvement of 59% compared with the year-ago quarter’s actual figure.

Meanwhile, the consensus mark for revenues is pegged at $88 million, reflecting 10% growth from the year-ago quarter’s actual figure.

Also, Exponent has an impressive earnings surprise history having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 12.4%.

Shares of the company have rallied 17.3% year to date against the industry’s decline of 0.8%.

Alliance Data Systems Corporation ADS is a leading data-driven marketing and loyalty solutions provider. The Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at $4.27 per share and $1.9 billion, respectively.

Earnings estimates, when compared with the year-ago quarter’s actual figures, reflect growth of 9.2%. Revenue estimates shows a 2.3% year-over-year improvement.

Alliance Data Systems’ earnings surprise history has been impressive too. The company outpaced estimates in each of the trailing four quarters, with an average positive surprise of 9%.

The stock has declined 16.5% year to date against its industry’s rally of 6.2%.

What Does Our Model Suggest?

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Conversely, a Zacks Rank #4 (Sell) or 5 (Strong Sell) stock should be avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

While Exponent has a Zacks Rank #3 and an Earnings ESP of 0.00%, Alliance Data Systems has a Zacks Rank #4 and an Earnings ESP of -1.17%. So, per the Zacks model, both the companies are unlikely to beat on earnings in Q1.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
Exponent, Inc. (EXPO) : Free Stock Analysis Report
 
Alliance Data Systems Corporation (ADS) : Free Stock Analysis Report
 
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