Fiserv (NASDAQ:FISV), Inc. (NYSE:FIS) , a financial services technology provider, is slated to report second-quarter 2016 results on Aug 2. Last quarter, it posted a positive earnings surprise of 3.92%. The company has outperformed the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive earnings surprise of 2.79%.
Factors at Play
Fiserv commands a leading position in the financial and payment solutions business backed by a broad customer base and key contract wins. Additionally, its strong user base of Mobiliti ASP remains a major growth driver. Moreover, the company expects revenues from base solutions like DNA, Agiliti, EMV and Now to drive growth.
In the second quarter, Fiserv extended its 16-year old credit processing contract with John Deere Financial, a division of Deere & Company (NYSE:DE) by another 10 years. This apart, the company added Bangkok Bank and Panin bank to its client list in the quarter.
The company remains focused on expanding its product portfolio. In June, Fiserv launched a palm authentication biometric tool, Verifast, to enable banks and credit firms to reduce frauds and transaction time and improve branch service efficiency.
However, investors should keep in mind that increasing regulations in the banking and financial services industry and intensifying competition from the likes of Fidelity National Information Services, Inc. (NYSE:FIS) and others remain pressing concerns.
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 $1.08.
Zacks Rank: Fiserv has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
Meanwhile, 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 is a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
Zoetis Inc (NYSE:ZTS) has an earnings ESP of + 2.27% and a Zacks Rank #1.
DEERE & CO (DE): Free Stock Analysis Report
FIDELITY NAT IN (FIS): Free Stock Analysis Report
FISERV INC (FISV): Free Stock Analysis Report
ZOETIS INC (ZTS): Free Stock Analysis Report
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