Business Service Stocks' Q3 Earnings on Oct 28: XRX & MA
The earnings season is progressing on a positive track, although the growth isn’t noteworthy. Nevertheless, it is a ray of light after five consecutive quarters of earnings declines for the S&P 500 index. As of Oct 26, 198 S&P 500 companies have reported earnings.
Per the latest Earnings Trends report, 198 S&P 500 companies have reported their earnings so far, accounting for 48.9% of the index’s total market capitalization, with 73.7% topping EPS estimates and 61.1% coming in ahead of top-line expectations. According to the report, revenues for the 198 companies are up 1.9% from the same period last year.
However, the report projects that earnings of all the S&P 500 companies combined will move up 1.4% from the year-ago period, whereas revenue will rise 1.4%.
Five out of 16 Zacks sectors are expected to witness a decline in earnings in the third quarter, with Oil/Energy, Autos and Transportation being the biggest drag. However, the Retail/Wholesale sector is seeing improvement in spite of overseas turmoil, fluctuating commodity prices and Fed rate-related controversies.
The Business Services sector is looking reasonably good. For the sector, earnings are expected to grow 13%, while sales are touted to rise 8.6% over the last year. The projected improvement is majorly driven by the growing momentum in the economy as a whole and the job market during the quarter.
Let’s have a sneak peek at two major Business Service Stocks scheduled to report their third-quarter 2016 results tomorrow.
Xerox Corporation XRX is scheduled to report its results before the opening bell tomorrow. In the to-be-reported quarter, Xerox continued to streamline its business by selling its Information Technology Outsourcing unit and restructuring its government healthcare business.
Xerox is focused on reprioritizing its investments and accelerating restructuring actions to improve revenue and margin. As part of the restructuring, Xerox has decided to execute a three-year strategic transformation program which will target incremental savings of $700 million across all segments. When combined with savings from cost streamlining actions currently in progress, Xerox is aiming to realize cumulative cost reduction of $2.4 billion over three years. Xerox also remains committed to its five-plank strategy that is centered on portfolio management, global growth, cost transformation, operational excellence and analytics.
During the quarter, the company appointed Brian Webb-Walsh as chief financial officer (CFO) of Conduent Incorporated, upon completion of the separation. Brian has nearly twenty years of experience with Xerox, which will help the company improve its top-line growth going forward.
Our proven model does not conclusively show that Xerox is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. For the quarter to be reported, Xerox’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Read More: Can Xerox (XRX) Spring a Surprise this Earnings Season?
XEROX CORP Price and EPS Surprise
XEROX CORP Price and EPS Surprise | XEROX CORP Quote
MasterCard Incorporated MA is set to report its results tomorrow. Third-quarter earnings will benefit from a number of factors such as recent investments, integration of acquisitions, a challenging forex and international environment, and higher rebates and incentives. Also, we expect to see double-digit volume and transaction growth across most of its markets, as it continues to win deals by differentiating itself with service.
We expect third-quarter earnings to witness growth in MasterCard’s Other Revenues driven by strength in the company’s value-added services such as the Advisors consulting business, cloud-based analytics, and safety and security product offerings.
MasterCard carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
Read More: Is a Surprise in Store for MasterCard (MA) in Q3 Earnings?
MASTERCARD INC Price and EPS Surprise
MASTERCARD INC Price and EPS Surprise | MASTERCARD INC Quote
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