What Awaits Fidelity National (FIS) This Earnings Season?

Fidelity National Information Services, Inc. (NYSE:FIS) is set to release second-quarter 2016 earnings results on Jul 26. In the last quarter, the company reported a positive earnings surprise of 6.76%. The company delivered positive earnings surprises in three of the last four quarters, with an average positive earnings surprise of 2.47%.

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

Factors to Consider

Fidelity holds a prime position in the financial and payments solutions business, primarily because of its diversified product portfolio. This apart, increasing international exposure, recurring revenue model, cost synergies from acquisitions and a loyal customer base are significant positives.

We also believe that Fidelity is well positioned to benefit from increasing investments in mobile banking and innovative products such as PayNet. Also, accretive acquisitions have played an important role.

However, in the past, the company witnessed weakness in its Professional Services business and sluggish demand from its large and global financial institution clients.

In addition, ongoing macroeconomic uncertainties, increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and uncertain regulatory environment are the primary headwinds, in our view. Also, intensifying competition from the likes of Fiserv (NYSE:FIS) , Global Payments Inc. (NYSE:GPN) and others remain 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, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: Fidelity’s Earnings ESP is +2.33%. This is because the Most Accurate estimate stands at 88 cents while the Zacks Consensus Estimate is pegged lower at 86 cents per share.

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

FIDELITY NAT IN Price and EPS Surprise

FIDELITY NAT IN Price and EPS Surprise | FIDELITY NAT IN Quote

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:

Post Holdings Inc. (NYSE:POST) with an Earnings ESP of +12.77% and a Zacks Rank #1.