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Business Services Earnings on Jul 31: SPOT, NLSN. ADP, APTV

The picture for the Business Services space so far this earnings season has been encouraging. Key players such as Omnicom OMC, The Interpublic IPG, IHS Markit INFO and Waste Management WM have delivered an earnings beat.

Backed by economic strength, both manufacturing and non-manufacturing activities stayed healthy in the second quarter, keeping demand for business services in good shape.

The sector remained buoyed by a strong labor market, increase in personal consumption expenditures (PCE) and federal, state and local government spending, as well as low unemployment and inflation. Also, it was less affected by trade war. This is because business services firms have lower foreign exposure compared to goods companies and incur lower foreign input costs that might be subject to tariffs.

Per the latest Earnings Preview, total earnings of the Zacks Business Services sector are expected to be up 7% on 3.5% higher revenues in the current reporting cycle. It currently carries a Zacks Sector Rank in the top 25% (4 out of 16 sectors). It has gained a massive 36.2% year to date, outperforming the 19.1% rally of the Zacks S&P 500 composite.

Key Releases on Jul 31

Given this backdrop, investors interested in business services stocks can watch out for four companies that are scheduled to report their quarterly results on Jul 31.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We do not recommend Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Music streaming giant Spotify Technology S.A. SPOT will report second-quarter 2019 results before the bell.

The Zacks Consensus Estimate for revenues is pegged at $1.83 billion, indicating year-over-year growth of 22.2%. The expected improvement is likely to be driven by Premium as well as Ad-Supported revenue growth. The company’s Family and Student plans should drive premium subscribers’ growth. Ad-supported revenues are likely to be driven by measurement and programmatic channels.

The company is expected to incur a loss of 51 cents per share, which indicates 16.4% improvement from the year-ago quarter reported figure.

Spotify has an impressive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with the average beat being 70.9%.

The company has a Zacks Rank #2 and an Earnings ESP of +47.32%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Measurement giant Nielsen Holdings NLSN is scheduled to report second-quarter 2019 earnings before the bell.

The Zacks Consensus Estimate for revenues is pegged at $1.62 billion, indicating decline of 1.6% from the year-ago quarter reported figure. The expected decline is likely to be due to continued weakness in local television measurement, innovation and custom analytics.

The consensus mark for the to-be-reported quarter’s earnings stands at 41 cents, indicating year-over-year increase of 28.1%. The bottom line is expected to benefit significantly from the company’s productivity initiatives.

Nielsen delivered average four-quarter negative earnings surprise of 12.4%. It has a Zacks Rank #3 and an Earnings ESP of +1.38%.

Business process outsourcing services provider Automatic Data Processing ADP will release its fourth-quarter fiscal 2019 results before the bell.

The consensus estimate for revenues is pegged at $3.5 billion, indicating growth of 5.6% from the year-ago reported figure. The upside is likely to be driven by strength in the company’s Employer Services down market offerings and multinational solutions.

For earnings, the consensus mark is pegged at $1.13, indicating growth of 22.8% from the year-ago reported figure. Continued strength in margin performance is expected to boost ADP’s bottom line.

The company has an impressive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with the average being 7.4%. The company has a Zacks Rank #4 and an Earnings ESP of 0.00%.

Technology and mobility company Aptiv APTV will report second-quarter 2019 results before the bell.

The Zacks Consensus Estimate for revenues is pegged at $3.62 billion, indicating year-over-year decline of 1.6%. The expected decline is likely to be due to a challenging global demand environment. The company expects global vehicle production to be down 5% year over year in the second quarter with 12% decline in China and 9% in Europe.

The consensus mark for earnings in the to-be-reported quarter stands at $1.13, indicating year-over-year decline of 19.3%. Foreign exchange, commodity and tariff headwinds are expected to weigh on the bottom line.

Aptiv delivered average four-quarter positive earnings surprise of 5.3%. It has a Zacks Rank #4 and an Earnings ESP of -0.93%.

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IHS Markit Ltd. (INFO): Free Stock Analysis Report
 
Nielsen Holdings Plc (NLSN): Free Stock Analysis Report
 
Interpublic Group of Companies, Inc. (The) (IPG): Free Stock Analysis Report
 
Omnicom Group Inc. (OMC): Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report
 
Waste Management, Inc. (WM): Free Stock Analysis Report
 
Aptiv PLC (APTV): Free Stock Analysis Report
 
Spotify Technology SA (SPOT): Free Stock Analysis Report
 
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