Fiserv, Inc. (NASDAQ:FISV) , a financial services technology provider, is slated to report third-quarter 2016 results on Oct 26. Last quarter, it posted earnings in line with expectations. The company has outperformed the Zacks Consensus Estimate in two of the trailing four quarters with an average positive earnings surprise of 2.53%.
Factors at Play
Despite the earnings beat in the last quarter, Fiserv’s top line ringed some warnings bells as it missed expectations. The company’s sales are being negatively impacted due to lower termination fees, EMV deferral and adverse foreign currency translations.
We expect sales in the to-be-reported quarter to remain muted as well. This apart, the company has a highly leveraged balance sheet. Moreover, investors should keep in mind that increasing regulations, ongoing consolidations in the banking and financial services industry and intensifying competition from peers remain pressing concerns.
Nonetheless, its broad customer base especially for its Mobiliti ASP solution remains a growth driver. The company also expects revenues from base solutions like DNA, Agiliti, EMV and Now to drive growth.
Earnings Whispers?
Our proven model does not conclusively show that Fiserv will beat earnings estimates 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: Fiserv has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.13 per share.
Zacks Rank: Fiserv has 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.
Stock to Consider
Here are a few stocks that, as per our model, have the right combination of the two key components:
NN Inc. (NASDAQ:NNBR) has an Earnings ESP of +4.35% and a Zacks Rank #1.
Amazon.com Inc. (NASDAQ:AMZN) has an Earnings ESP of +6.98% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Entergy Corporation (NYSE:ETR) has an Earnings ESP of +8.07% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
ENTERGY CORP (ETR): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis Report
NN INC (NNBR): Free Stock Analysis Report
FISERV INC (FISV): Free Stock Analysis Report
Original post
Zacks Investment Research