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3 Business Information Stocks Worth a Look Amid Pandemic Blues
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Increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to cater to the pandemic-driven rising demand for services that ensure risk mitigation, cost reduction and productivity improvement. The industry is still significantly weak when compared with the pre-pandemic level.
Rising technology adoption is supporting companies like Black Knight, Inc. , S&P Global Inc. (SPGI - Free Report) and FactSet Research Systems Inc. (FDS - Free Report) , enabling the firms to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment characterized by evolving customer behavior, preference and demographics.
Prominent industry players include information-measurement giant Nielsen (NLSN), ratings, benchmarks, analytics, and data provider S&P Global, critical information and analytics provider IHS Markit (INFO) and provider of data-analytics solutions Verisk Analytics (VRSK).
4 Trends Shaping the Future of Information Industry
Demand Environment Healthy: The industry is mature and has witnessed a progressively-growing business environment in the past few years. Revenues, income and cash flows have grown steadily.
Emergency of Customer-centric Solutions: The coronavirus pandemic has triggered a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. This, in turn, has opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Digital Transformation is the Key: Companies that have either completed or progressed significantly with their digital transformation journeys are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates the time to market, and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: Automation in assembling and use of big data in enhancing business information will fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy, and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #181, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily lowering their estimates. In the past year, the industry’s consensus earnings estimate for 2020 has moved 37.4% south.
Despite the gloomy prospects, we present a few stocks that you may want to consider for your portfolio. But before that it’s worth taking a look at the industry’s performance and current valuation.
Industry Underperforms the S&P 500, Outperforms Sector
Over the past year, the Zacks Business – Information Services industry has underperformed the S&P 500 composite but outperformed the broader sector.
While the industry has declined 5.8%, the S&P 500 composite has rallied 17.9% and the broader sector has depreciated 8.8%.
One-Year Price Performance
Industry’s Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business information services stocks, the industry is currently trading at 29.32 compared with the S&P 500’s 22.49 and the sector’s 29.26.
Over the past five years, the industry has traded as high as 30.61X, as low as 19.56X and at the median of 22.79X, as the charts below show.
Forward 12-month Price-to-Earnings (P/E)
3 Business Information Service Stocks to Consider
We are presenting three stocks, one carrying a Zacks Rank #2 (Buy) and two carrying a Zacks Rank #3 (Hold), that are well positioned to grow in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Black Knight: This integrated software, data, and analytics solutions provider has seen its stock gaining 26.8%, in the past year, on its expanding client base, strengthening client relationships through innovative solutions, strategic acquisitions and a robust digital footprint.
The company currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for 2021 earnings has been revised 1.3% upward in 60 days’ time to $2.39.
Price & Consensus: BKI
S&P Global: This provider of ratings, benchmarks, analytics, and data to the capital and commodity markets carries a Zacks Rank #3, at present. Amid the coronavirus mayhem, successful operations from remote locations, along with productivity programs, have been aiding its top line. Cost-reduction measures such as hiring freeze, reduction in travel, advertising and promotion expenses, and lowered use of outside professional services have kept its bottom line in good shape.
The Zacks Consensus Estimate for current-year EPS has moved 0.4% north in the past 60 days to $11.84. The stock has rallied 8.9% over the past year.
Price & Consensus: SPGI
FactSet Research Systems: This integrated financial information and analytical applications provider has a business model and investment plan that make its operations more relevant to the challenging situations of today. The company is making investments toward digital transformation, and personalized and value added solutions. Its three-year plan is focused on technology transformation, data creation for private markets and expansion of content for banking. These will help the company expand the client base and further strengthen its foothold in the market in the upcoming period.
The company currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for the ongoing-year EPS has been revised 1.5% upward in 60 days’ time to $11.85. The stock has appreciated 6.9% over the past year.
Price & Consensus: FDS
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
3 Business Information Stocks Worth a Look Amid Pandemic Blues
Increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to cater to the pandemic-driven rising demand for services that ensure risk mitigation, cost reduction and productivity improvement. The industry is still significantly weak when compared with the pre-pandemic level.
Rising technology adoption is supporting companies like Black Knight, Inc. , S&P Global Inc. (SPGI - Free Report) and FactSet Research Systems Inc. (FDS - Free Report) , enabling the firms to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment characterized by evolving customer behavior, preference and demographics.
Prominent industry players include information-measurement giant Nielsen (NLSN), ratings, benchmarks, analytics, and data provider S&P Global, critical information and analytics provider IHS Markit (INFO) and provider of data-analytics solutions Verisk Analytics (VRSK).
4 Trends Shaping the Future of Information Industry
Demand Environment Healthy: The industry is mature and has witnessed a progressively-growing business environment in the past few years. Revenues, income and cash flows have grown steadily.
Emergency of Customer-centric Solutions: The coronavirus pandemic has triggered a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. This, in turn, has opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Digital Transformation is the Key: Companies that have either completed or progressed significantly with their digital transformation journeys are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates the time to market, and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: Automation in assembling and use of big data in enhancing business information will fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy, and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #181, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily lowering their estimates. In the past year, the industry’s consensus earnings estimate for 2020 has moved 37.4% south.
Despite the gloomy prospects, we present a few stocks that you may want to consider for your portfolio. But before that it’s worth taking a look at the industry’s performance and current valuation.
Industry Underperforms the S&P 500, Outperforms Sector
Over the past year, the Zacks Business – Information Services industry has underperformed the S&P 500 composite but outperformed the broader sector.
While the industry has declined 5.8%, the S&P 500 composite has rallied 17.9% and the broader sector has depreciated 8.8%.
One-Year Price Performance
Industry’s Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business information services stocks, the industry is currently trading at 29.32 compared with the S&P 500’s 22.49 and the sector’s 29.26.
Over the past five years, the industry has traded as high as 30.61X, as low as 19.56X and at the median of 22.79X, as the charts below show.
Forward 12-month Price-to-Earnings (P/E)
3 Business Information Service Stocks to Consider
We are presenting three stocks, one carrying a Zacks Rank #2 (Buy) and two carrying a Zacks Rank #3 (Hold), that are well positioned to grow in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Black Knight: This integrated software, data, and analytics solutions provider has seen its stock gaining 26.8%, in the past year, on its expanding client base, strengthening client relationships through innovative solutions, strategic acquisitions and a robust digital footprint.
The company currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for 2021 earnings has been revised 1.3% upward in 60 days’ time to $2.39.
Price & Consensus: BKI
S&P Global: This provider of ratings, benchmarks, analytics, and data to the capital and commodity markets carries a Zacks Rank #3, at present. Amid the coronavirus mayhem, successful operations from remote locations, along with productivity programs, have been aiding its top line. Cost-reduction measures such as hiring freeze, reduction in travel, advertising and promotion expenses, and lowered use of outside professional services have kept its bottom line in good shape.
The Zacks Consensus Estimate for current-year EPS has moved 0.4% north in the past 60 days to $11.84. The stock has rallied 8.9% over the past year.
Price & Consensus: SPGI
FactSet Research Systems: This integrated financial information and analytical applications provider has a business model and investment plan that make its operations more relevant to the challenging situations of today. The company is making investments toward digital transformation, and personalized and value added solutions. Its three-year plan is focused on technology transformation, data creation for private markets and expansion of content for banking. These will help the company expand the client base and further strengthen its foothold in the market in the upcoming period.
The company currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for the ongoing-year EPS has been revised 1.5% upward in 60 days’ time to $11.85. The stock has appreciated 6.9% over the past year.
Price & Consensus: FDS
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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