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Business Services Q4 Earnings on Feb 7: SPGI, OMC & FIS

The earnings season is well into the business end with almost 500 companies reporting this week, including 84 S&P 500 index members. The 275 S&P 500 companies that have already reported results till Feb 3, more or less confirm that the overall fourth-quarter results are likely to be the best in about two years.

Total earnings for these 275 companies are up 6.9% on 4.2% higher revenues, with 68% beating earnings estimates and 54.5% surpassing top-line expectations. Based on the hitherto observed pattern, the fourth quarter is anticipated to register high single-digit percentage growth on a year-over-year basis.  

Per the latest Earnings Preview, overall fourth-quarter earnings for all the S&P 500 companies are expected to be up 6.8% year over year on 3.9% growth in revenues. This represents a healthy improvement from third quarter that ended the earnings recession of five consecutive quarters for the benchmark index. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, improved job market scenario and rising oil prices. Experts widely believe that earnings growth is likely to be in double digits in 2017 and beyond.

For the fourth quarter as a whole, about four of the 16 Zacks sectors are expected to witness an earnings decline, with Autos, Conglomerates and Transportation being the biggest drag.

The Business Services sector is looking impressive. For the sector, earnings are expected to grow 11.1% year over year, while sales are touted to rise 8% driven by higher capital investment in the infrastructure market and improved economic and labor market conditions.

Let’s have a sneak peek at three major Business Services stocks scheduled to report fourth-quarter 2016 earnings on Feb 7 to see how things are shaping up for the upcoming results.

S&P Global, Inc. SPGI is slated to report earnings before the market opens tomorrow. The company completed several business divestitures in the third quarter including the sale of J.D. Power, its two pricing businesses SPSE and CMA, and the equity research business. The impact of these divestitures is likely to be seen in its fourth-quarter results. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 or #3 (Hold) for a likely earnings beat.You can see the complete list of today’s Zacks #1 Rank stocks here. For the impending quarter, S&P Global has an Earnings ESP of +1.67% and Zacks Rank #2 (Buy), making an earnings beat likely. (Read more: S&P Global to Post Q4 Earnings: A Beat in the Cards?)

S&P Global Inc. Price and EPS Surprise


S&P Global Inc. Price and EPS Surprise | S&P Global Inc. Quote

Global marketing and corporate communications firm Omnicom Group Inc. OMC is scheduled to report results before the opening bell tomorrow. For the to-be-reported-quarter, Omnicom’s revenues are anticipated to be marred by uncertainty in the domestic markets by the then prevailing U.S. Presidential election campaigns. In addition, client spending patterns in the global markets are likely to be constrained by a challenging macroeconomic environment and geopolitical scenario. We cannot conclusive predict an earnings beat this quarter as the company has a Zacks Rank #4 (Sell) and an ESP of -0.69%. (Read more: Omnicom Q4 Earnings: What's in Store for the Stock?)

Omnicom Group Inc. Price and EPS Surprise


Omnicom Group Inc. Price and EPS Surprise | Omnicom Group Inc. Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fidelity National Information Services, Inc. FIS is set to release earnings results before the market opens tomorrow. 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 with accelerating smartphone and tablet usage. Fidelity’s recent partnership with PayPal for digital payments is likely to boost its customer engagement. We cannot conclusive predict an earnings beat this quarter as the company has an ESP of +0.88% and a Zacks Rank #4. (Read more: Fidelity National Q4 Earnings: What Lies in Store?)

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