Business Services Earnings Slated On May 2: ADP, RSG & More

The first-quarter earnings season has crossed the half-way mark, with earnings and revenue growth on track to reach its highest level in seven years.

According to the latest Earnings Preview, 267 S&P 500 companies have already reported results. Earnings for these companies increased 25.1% from the same period last year on 10% higher revenues, with 76.8% outpaced earnings estimates and 73.8% exceeded top-line expectations. The proportion of companies beating both EPS and revenue estimates is 61.4%. Notably, more than 900 companies (including 142 S&P 500 members) will report results this week.

Bullish Q1 View

For the S&P 500 index, total first-quarter 2018 earnings are expected to increase 22.6% on 8.4% higher revenues. Notably, the last reported quarter witnessed 13.4% earnings growth on 8.6% increase in revenues.

For full-year 2018, total earnings are expected to improve 18.5% on 5.5% higher revenues.

A Rosy Picture for Business Services

Per the above report, companies in the Business Services sector are expected to record top- and bottom-line growth of 5.2% and 17.1%, respectively. Notably, 13 out of the 16 Zacks sectors will end the ongoing earnings season with double-digit earnings growth.

One of those sectors is the Business Services. Usually, this sector is directly proportional to the broader economy, which is currently quite favorable. In fact, a rise in GDP, record-low unemployment level, strong job additions, easing of the U.S. dollar and momentum in oil prices are all signs of improvement in the U.S. economy, which in turn, should boost the sector’s performance. Trump’s business-friendly policies, including tax cuts, and repeal of regulations are additional tailwinds.

Stocks to Watch for Earnings on May 2

Automatic Data Processing, Inc. (NASDAQ:ADP) , a business process outsourcing services provider, will report third-quarter fiscal 2018 results. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $3,667 million, reflecting year-over-year growth of 7.5%. The same for earnings per share stands at $1.44, indicating year-over-year growth of 9.9%.

In the yet-to-be-reported quarter, the company’s top line is expected to benefit from higher organic growth, favorable foreign currency movements and acquisitions. The bottom line is likely to be positively impacted by tax benefits as a result of Tax Cuts and Jobs Act.

Additionally, Automatic Data Processing has an impressive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average beat of 5.5%.

In a year’s time, shares of this Zacks Rank #2 (Buy) company have gained 13.6% compared with the industry’s rally of 15.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Republic Services, Inc. (NYSE:RSG) , a solid waste collection, transfer, recycling and disposal company, will report first-quarter 2018 results. The consensus estimate for first-quarter revenues stands at $2,405 million, reflecting year-over-year growth of 0.5%. The top line is expected to benefit from higher internal growth, buyouts and strong segmental performance.

The consensus mark for earnings per share in the to-be-reported quarter is pegged at 70 cents, indicating year-over-year growth of 27.3%. Lower tax rates and revenue growth are likely to positively impact the company’s bottom line.

Republic Services also has an impressive earnings surprise history, having outpaced estimates in all of the trailing four quarters, with an average positive surprise of 5.1%. The company carries a Zacks Rank #4 (Sell).

Shares of the company have gained 2.2% in the past year, underperforming the industry’s rally of 4.1%.

Aptiv plc (NYSE:APTV) , an automotive technology solutions provider, will report first-quarter 2018 results. The Zacks Consensus Estimate for the company’s earnings is pegged at $1.20, reflecting a decline of 24.5% from the year-ago quarter’s actual figure. The consensus mark for revenues is pegged at $3.4 billion, reflecting a 21.3% decline from the year-ago quarter’s actual figure.

The company, however, has an impressive earnings surprise history. It surpassed estimates in three of the trailing four quarters, with an average beat of 3.8%.

In a year’s time, shares of this Zacks Rank #2 have rallied 5.7% against the industry’s decline of 5.2%.

IQVIA Holdings Inc. (NYSE:IQV) , an integrated information and technology-enabled healthcare services company, will report first-quarter 2018 results. The Zacks Consensus Estimate for the company’s earnings and revenues is pegged at $1.28 and $2.4 billion, respectively.

Earnings estimates, when compared with the year-ago quarter’s actual figures, reflect growth of 26.7%. Revenue estimates show a 27.9% year-over-year improvement.

This Zacks Rank #3 (Hold) company’s earnings surprise history has been impressive too. The company outpaced estimates in each of the trailing four quarters, with an average beat of 4.8%.

The company’s shares have rallied 13.2% in a year against the industry’s decline of 5.2%.

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