What's In Store For Fidelity National (FIS) In Q3 Earnings?

Fidelity National Information Services, Inc. (NYSE:FIS) is set to release third-quarter 2016 earnings results on Nov 1. In the last quarter, the company reported a positive earnings surprise of 4.65%. The company delivered positive earnings surprises in three out of the last four quarters, with an average positive earnings surprise of 2.58%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Fidelity delivered mixed results in the second-quarter of 2016. While earnings surpassed the Zacks Consensus Estimate, revenues missed the consensus mark. On a year-over-year basis, both the top line and the bottom line registered decent growth.

Fidelity has strengthened its dominant position in the financial and payments solutions business, primarily based on its superior product portfolio.

Also, Fidelity is well positioned to benefit from increasing investment in mobile banking and innovative products such as PayNet. Mobile banking is developing into an essential extension of online banking as smartphone and tablet usage continues to accelerate globally.

We believe that banks and financial institutions will choose the company’s innovative solutions (such as mobile wallet) in order to differentiate their services, thereby driving top-line growth.

Moreover, Fidelity’s Open Payment Framework has witnessed consumer adoptions this year in Hong Kong, India and Canada. We believe new customer wins as well as accretive acquisitions are key catalysts in the near term. Nevertheless, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and uncertain regulatory environment are the primary headwinds. Also, intensifying competition from the likes of Fiserv (NASDAQ:FISV) Inc. (NYSE:FIS) , Global Payments Inc. (NYSE:GPN) and Alliance Data Systems Corp (NYSE:ADS). remains a concern.

Earnings Whispers?

Our proven model does not conclusively show that Fidelity National is likely to 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: Fidelity’s Earnings ESP is -1.02%. This is because the Most Accurate estimate stands at 97 cents while the Zacks Consensus Estimate is pegged at 98 cents per share. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

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

Stock to Consider

Here is a company that, as per our model, has the right combination of elements to post an earnings beat this quarter:

Inovalon Holdings, Inc. (NASDAQ:INOV) with an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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