Is Fiserv (FISV) Set To Surpass Estimates In Q1 Earnings?

Fiserv (NASDAQ:FISV), Inc. (NYSE:FIS) is set to report first-quarter 2017 results on Apr 26, after the closing bell. Last quarter, it posted in-line earnings. In the trailing four quarters, the company has recorded an average positive earnings surprise of 1.20%. Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our proven model shows that Fiserv is likely to beat earnings because it has the right combination of the two key ingredients. 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.

Zacks ESP: Fiserv currently has an Earnings ESP of +0.85%. This is because the Most Accurate estimate is $1.19 while the Zacks Consensus Estimate is pegged at $1.18. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Fiserv has a Zacks Rank #2. The combination of Fiserv’s Zacks Rank #2 and Earnings ESP of +0.85% makes us confident in looking for an earnings beat this quarter.

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

Factors at Play

Fiserv commands a leading position in the financial and payment solutions business, backed by a broad customer base and key contract wins. Additionally, the strong user base of Mobiliti ASP remains a major growth driver. In 2016, Mobiliti ASP subscribers increased 30% year over year to 5.5 million.

Fiserv also expects revenues from base solutions like DNA, Agiliti and Now to drive growth as well as benefit from its new five-year cost cutting program.

However, the company’s sales are being negatively impacted due to lower termination fees, EMV deferral and adverse foreign currency translations. Plus, ongoing consolidation in the banking and financial services industry and intensifying competition from the likes of Equifax Inc (NYSE:EFX), Fidelity National Information Services, Inc. (NYSE:FIS) and Global Payments Inc. remain headwinds.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Teradyne, Inc. (NYSE:TER) has an Earnings ESP of +2.63% and a Zacks Rank #1.

Seagate Technology plc (NASDAQ:STX) has an Earnings ESP of +3.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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