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3 Service Stocks Poised to Beat Earnings Estimates in Q4
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Things were not rosy for the Business Services sector throughout the fourth quarter of 2022 due to macroeconomic headwinds such as the ongoing Russia-Ukraine war, high inflation and Federal Reserve’s aggressive stance on hiking the interest rate to curb inflation. Widespread supply-chain disruptions and labor market constraints were major overhangs for service stocks. The fear of an economic slowdown affected consumer spending.
The sector is a major beneficiary of manufacturing and service activities, and both have seen a contraction phase in the fourth quarter. In December, the manufacturing sector contracted for the second consecutive month after 29 months of expansion. The service sector contracted for the first time after a 30-month period of expansion.
Nevertheless, the sector has plenty of driving factors that one cannot ignore. The essentiality of certain services like waste management and pest control, the rise in demand for risk mitigation and consulting services, increased expertise in improving operational efficiency and reducing costs, successful work-from-home models, the growing adoption of cloud-based services, and digital transformation acted as tailwinds in the quarter.
Earnings Trends in Q4
Per the latest Earnings Trends report, the business services sector is likely to record 6.1% growth in earnings and a 5% sales increase for the fourth quarter of 2022. The projected movement implies a deceleration from the 6.8% rise in earnings on a 9.5% increase in revenues in the third quarter. PagSeguro Digital Ltd. (PAGS - Free Report) , Veradigm Inc. (MDRX - Free Report) and TuSimple Holdings Inc. (TSP - Free Report) are some of the prominent players, which are poised to deliver an earnings beat this time around.
Here’s How We Pick the Right Stocks
Against the current backdrop and between a large number of business services stocks, it is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.
While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.
The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PagSeguro Digital currently has a Zacks Rank of 3 and an ESP of +7.87%. The financial technology solutions provider’s fourth-quarter results are scheduled to be released on Mar 2 after the bell.
The Zacks Consensus Estimate for the bottom line is pegged at 22 cents, indicating a year-over-year decline of 4.4%. The consensus mark for revenues is pegged at $637.2 million, implying 9.9% year-over-year growth. PAGS has a trailing four-quarter average surprise of 33.1%.
Veradigm currently has a Zacks Rank of 3 and an ESP of +7.78%. The healthcare technology company’s fourth-quarter results are scheduled to be released on Feb 23 after the bell.
The Zacks Consensus Estimate of the bottom line is pegged at 28 cents, which suggests a 64.6% decline from the year-ago reported figure. The Zacks Consensus Estimate for revenues is pegged at $168.6 million, indicating a 57% decrease from the figure reported in the previous year. MDRX has an average surprise rate of 38.4% in the previous four quarters.
TuSimple currently has a Zacks Rank of 3 and an ESP of +8.88%. The autonomous technology company’s fourth-quarter results are expected to be released soon.
The Zacks Consensus Estimate for the bottom line is pegged at a loss of 58 cents, whereas it reported a loss of 53 cents in the year-ago quarter. TSP has an average surprise rate of 10.6% for the previous four quarters.
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3 Service Stocks Poised to Beat Earnings Estimates in Q4
Things were not rosy for the Business Services sector throughout the fourth quarter of 2022 due to macroeconomic headwinds such as the ongoing Russia-Ukraine war, high inflation and Federal Reserve’s aggressive stance on hiking the interest rate to curb inflation. Widespread supply-chain disruptions and labor market constraints were major overhangs for service stocks. The fear of an economic slowdown affected consumer spending.
The sector is a major beneficiary of manufacturing and service activities, and both have seen a contraction phase in the fourth quarter. In December, the manufacturing sector contracted for the second consecutive month after 29 months of expansion. The service sector contracted for the first time after a 30-month period of expansion.
Nevertheless, the sector has plenty of driving factors that one cannot ignore. The essentiality of certain services like waste management and pest control, the rise in demand for risk mitigation and consulting services, increased expertise in improving operational efficiency and reducing costs, successful work-from-home models, the growing adoption of cloud-based services, and digital transformation acted as tailwinds in the quarter.
Earnings Trends in Q4
Per the latest Earnings Trends report, the business services sector is likely to record 6.1% growth in earnings and a 5% sales increase for the fourth quarter of 2022. The projected movement implies a deceleration from the 6.8% rise in earnings on a 9.5% increase in revenues in the third quarter. PagSeguro Digital Ltd. (PAGS - Free Report) , Veradigm Inc. (MDRX - Free Report) and TuSimple Holdings Inc. (TSP - Free Report) are some of the prominent players, which are poised to deliver an earnings beat this time around.
Here’s How We Pick the Right Stocks
Against the current backdrop and between a large number of business services stocks, it is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.
While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.
The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PagSeguro Digital currently has a Zacks Rank of 3 and an ESP of +7.87%. The financial technology solutions provider’s fourth-quarter results are scheduled to be released on Mar 2 after the bell.
You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the bottom line is pegged at 22 cents, indicating a year-over-year decline of 4.4%. The consensus mark for revenues is pegged at $637.2 million, implying 9.9% year-over-year growth. PAGS has a trailing four-quarter average surprise of 33.1%.
PagSeguro Digital Ltd. Price and EPS Surprise
PagSeguro Digital Ltd. price-eps-surprise | PagSeguro Digital Ltd. Quote
Veradigm currently has a Zacks Rank of 3 and an ESP of +7.78%. The healthcare technology company’s fourth-quarter results are scheduled to be released on Feb 23 after the bell.
The Zacks Consensus Estimate of the bottom line is pegged at 28 cents, which suggests a 64.6% decline from the year-ago reported figure. The Zacks Consensus Estimate for revenues is pegged at $168.6 million, indicating a 57% decrease from the figure reported in the previous year. MDRX has an average surprise rate of 38.4% in the previous four quarters.
Veradigm Inc. Price and EPS Surprise
Veradigm Inc. price-eps-surprise | Veradigm Inc. Quote
TuSimple currently has a Zacks Rank of 3 and an ESP of +8.88%. The autonomous technology company’s fourth-quarter results are expected to be released soon.
The Zacks Consensus Estimate for the bottom line is pegged at a loss of 58 cents, whereas it reported a loss of 53 cents in the year-ago quarter. TSP has an average surprise rate of 10.6% for the previous four quarters.
TuSimple Holdings Inc. Price and EPS Surprise
TuSimple Holdings Inc. price-eps-surprise | TuSimple Holdings Inc. Quote