First Data (FDC) Q1 Earnings: Is Disappointment In Store?

First Data Corporation (NYSE:FDC) is set to report first-quarter 2018 results on April 30, before the bell.

The company has an Earnings ESP of -2.89% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

According our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

We don’t recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially if they have a negative Earnings ESP.

First Data’s has an impressive earnings surprise history, having outpaced estimates in one of the trailing four quarters and meeting the same on the other three occasions, with an average beat of 0.93%.

In a year’s time, the stock has declined 3.6% against its industry’s gain of 0.6%.

Q4 Highlights

In the fourth quarter, the company reported earnings of 44 cents, which were in line with the Zacks Consensus Estimate. The bottom line also increased 12.8% from the year-ago quarter.

Consolidated revenues that include transaction and processing fees, product sales, reimbursable debit network fees, postage and other were $3.0 billion, up 7% year over year and 6% on a constant-currency basis.

Factors Trending in Q1

First Data’s SMB direct business is more or less stable but yet to see an improvement. As a result, GBS North American business revenues are expected to be more or less flat in the to-be-reported quarter. First Data has made some significant investments in the SMB suite for digital growth and automation to enhance its cloud-based Clover point-of-sale operating system. These investments are yet to pay off.

First Data Corporation Revenue (TTM)

Meanwhile, the company continues to witness strong momentum in its enterprise business. First Data differentiates itself in this space by consistently offering new features and solutions to existing clients, and making continuous efforts to expand its client base. In fact, its efforts to remain in a leading position in the bank acquiring channel through strategic partnerships are impressive.

Already, integration of two recent acquisitions, CardConnect and BluePay, proved accretive to the company. These acquired entities have started making significant revenue contributions from the fourth quarter of 2017 and the momentum is expected to continue in the to-be-reported quarter.

Conclusion

Overall, we believe First Data’s focus on globalizing its offerings, cost management, strategic partnerships along with its healthy business around large and small banks is expected to boost growth going ahead.

Stocks to Consider

Here are some stocks from the broader Business Services sector that investors mayconsider, as our model shows that these have the right combination of elements to beat on earnings in first-quarter 2018:

Mastercard Incorporated (NYSE:MA) has an Earnings ESP of +0.08% and a Zacks Rank #2. The company is slated to report quarterly numbers on May 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

WEX Inc. (NYSE:WEX) has an Earnings ESP of +1.61% and a Zacks Rank of 2. The company is slated to report quarterly results on May 3.

FLEETCOR Technologies, Inc. (NYSE:FLT) has an Earnings ESP of +0.37% and a Zacks Rank #2. The company will report quarterly numbers on May 3.

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