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What's in Store for DST Systems (DST) this Earnings Season?

Zacks Equity Research
Updated

DST Systems Inc. DST is set to report second-quarter 2016 results on Jul 21. Last quarter, the company posted a positive earnings surprise of 10.3%. Let us see how things are shaping up for this announcement.

Factors to Consider

DST reported better-than-expected first-quarter results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. Also, both revenues and earnings increased on a year-over-year basis.

Recently, Broadridge Financial Solutions Inc. BR closed its acquisition of DST Systems’ North American Customer Communications (NACC) business. The two companies entered into a definitive agreement last month, wherein the said assets of DST System were to be acquired by Broadridge for a cash consideration of $410 million.

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We believe that DST Systems’ business volume and massive scale of operation in Financial Services are the other positives. Moreover, we expect steady contributions from acquisitions to support revenue growth in the to-be-reported quarter.

On the other hand, decreasing organic revenue growth, tough competition from International Business Machines Corporation and Fiserv Inc., and a high debt burden remain concerns.

DST SYSTEMS Price and EPS Surprise

DST SYSTEMS Price and EPS Surprise | DST SYSTEMS Quote

Earnings Whispers?

Our proven model does not conclusively show that DST will 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. That is not the case here as you will see below.

Zacks ESP: DST Systems ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.44 per share.

Zacks Rank: DST has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some companies, which you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

QUALCOMM Incorporated QCOM with Earnings ESP of +3.61% and a Zacks Rank #2

Amazon.com, Inc. AMZN with Earnings ESP of +37.72% and a Zacks Rank #3

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DST SYSTEMS (DST): Free Stock Analysis Report
 
AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
QUALCOMM INC (QCOM): Free Stock Analysis Report
 
BROADRIDGE FINL (BR): Free Stock Analysis Report
 
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Zacks Investment Research