Business Services Q2 Earnings on Jul 26: NLSN, RSG & More

The second-quarter reporting cycle has started on a solid note, with strong earnings and revenue momentum.

Per the latest Earnings Preview, 87 S&P 500 companies (who collectively account for 25.7% of the index’s total market capitalization) have already reported their quarterly numbers.

Per the report, second-quarter 2018 total earnings for these companies increased 20.9% from the same period last year on 10.3% higher revenues, with 86.2% of the companies beating EPS estimates and 77% surpassing revenue estimates.

Business Services Sector Paints a Rosy Picture

Per the above report, stocks in the Business Services sector are expected to record top- and bottom-line growth of 5.4% and 15.6%, respectively. Notably, the sector is one of the 11 Zacks sectors (out of total 16 Zacks sectors) expected to register double-digit earnings growth. Total second-quarter 2018 earnings are expected to be up 21% on 8.3% higher revenues.

The outlook of the business services sector is highly dependent on the health of the broader economy, which is currently quite favorable. The entire U.S. economy is benefiting from Trump administration’s business-friendly approach, including tax cuts, higher spending and repeal of regulations. This has improved the employment scenario, and aided manufacturing and non-manufacturing activities.

The business services sector has performed well compared with the benchmark index year to date. The sector has gained 12.1%, which compares favorably with the Zacks S&P 500 Composite’s rally of 6% in the said time frame.

Stocks to Watch Out for Earnings on Jul 26

Given this bullish backdrop, investors interested in Business Services’ stocks can watch out for four companies that are scheduled to report their second-quarter 2018 numbers on Jul 26.

Nielsen Holdings Plc NLSN

The Zacks Consensus Estimate for this measurement giant’s second-quarter revenues stands at $1.71 billion, reflecting year-over-year growth of 4%. The top line is expected to benefit from investments in innovative technologies and strategic partnerships that are improving the company’s clientele. (Read more: What's in the Offing for Nielsen in Q2 Earnings?)

The consensus mark for earnings is pegged at 63 cents, indicating year-over-year growth of 26%. Revenue growth in the company’s Watch segment is likely to drive the expected improvement.

However, Nielsen’s earnings surprise history has not been impressive. The company missed the Zacks Consensus Estimate in all the trailing four quarters, recording an average negative earnings surprise of 20.6%. The company carries a Zacks Rank #3 (Hold).

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

Republic Services, Inc. RSG

The company is a solid waste collection, transfer, recycling and disposal services provider. The Zacks Consensus Estimate for second-quarter revenues stands at $2.53 billion, same as the year-ago actual figure. The top line is expected to benefit from higher internal growth, buyouts and strong segmental performance.

The consensus mark for earnings is pegged at 75 cents, indicating year-over-year growth of 23%. Lower tax rates as a result of the new tax law (Tax Cuts and Jobs Act) and revenue growth are likely to positively impact the company’s bottom line. (Read more: Will Republic Services Disappoint in Q2 Earnings?)

Republic Services has an impressive earnings surprise history, having outpaced estimates in all of the trailing four quarters, with an average positive surprise of 6%. The company has a Zacks Rank #4 (Sell).

S&P Global Inc. SPGI

This company is a provider of ratings, benchmarks, analytics and data to the capital and commodity markets. The consensus estimate for second-quarter revenues is pegged at $1.60 billion, mirroring a 5.9% increase year over year. The top line is expected to be driven by an increase in non-transaction and international revenues, new entity ratings and Rating Evaluation Service fees as well as fees associated with surveillance.

Growth across Desktop, Data Management Solutions, and Risk Services, core subscription business and increase in revenues related to exchange-traded derivatives activity should also benefit the top line.

The consensus mark for earnings in the to-be-reported quarter is pegged at $2.13, indicating year-over-year growth of 23.8%. Lower tax rates (as a result of Tax Cuts and Jobs Act), revenue growth and operating performance are likely to boost the company’s bottom line. (Read more: S&P Global to Report Q2 Earnings: Is a Beat in Store?)

S&P Globalboasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 9.1%. The company carries a Zacks Rank #3.

Xerox Corporation XRX

The Zacks Consensus Estimate for revenues of this leading designer, developer, and seller of document management systems and solutions is pegged at $2.51 billion, reflecting year-over-year decline of 2.3%. The expected decline is likely to be due weak post-sale and equipment revenues.

Continuing lower page volume trends and a lower population of devices are expected to weigh on post-sale revenues in the to-be-reported quarter. Equipment sales are likely to suffer from overall market decline, unfavorable mix and weak OEM business. (Read more: What's in the Cards for Xerox This Earnings Season?)

The consensus mark for second-quarter earnings is pegged at 92 cents, indicating year-over-year growth of 5.7%. The uptick can be attributed to continued benefits from cost savings and productivity improvements.

Xerox has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 6%. The company carries a Zacks Rank #3.

Spotify Technology S.A. SPOT

The provider of music streaming services went public in April 2018. The consensus mark for second-quarter revenues is pegged at $1.51 billion, reflecting sequential growth of 32.7%. The company’s premium revenue growth was backed by strong performance in Latin America and expansion into new markets. Ad-Supported revenues should continue to be driven by the company’s Direct channel and strong growth in Programmatic.

The Zacks Consensus Estimate is pegged at a loss of 62 cents, indicating a sequential improvement of 62.9%. In the last reported quarter, it delivered a negative surprise of 206.1%. The company carries a Zacks Rank #3.

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Nielsen Holdings Plc (NLSN) : Free Stock Analysis Report
 
S&P Global Inc. (SPGI) : Free Stock Analysis Report
 
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SPOTIFY TECH SA (SPOT) : Free Stock Analysis Report
 
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