First Data (FDC) Q1 Earnings: A Disappointment in Store?

First Data Corporation FDC is set to report first-quarter 2018 results on Apr 30.

The company topped the Zacks Consensus Estimate in one of the trailing four quarters while reporting in-line results in the remaining three, with an average positive earnings surprise of 0.93%.

In the last reported quarter, First Data’s earnings of 44 cents per share grew 12.8% on a year-over-year basis and 10% sequentially. The figure was on par with the Zacks Consensus Estimate.

Consolidated revenues that include transaction and processing fees, product sales, reimbursable debit network fees, postage and other were $3.15 billion, up 7% year over year. Segmental revenues came in $1.94 billion, which also increased 6.5% on a year-over-year basis.

Top-line growth was driven by innovative product and services portfolio and expanding enterprise business.

Let’s see how things are shaping up for this quarter.

Partnerships & Acquisitions to Drive Results

Strategic partnerships and agreements have been playing a significant role in shaping the growth trajectory of the company.

During first-quarter 2018, First Data teamed up with RBL Bank. The partnership will allow RBL Bank to leverage First Data’s VisionPLUS for its credit card customers across India.

Earlier this year, the company announced a similar kind of partnership with SBI Card, a leading credit card issuer in India. The move enables SBI Card to leverage VisionPLUS to enhance service offerings.

These endeavors have improved the company’s client base and are likely to boost the top-line growth.

Moreover, Global Financial Solutions (GFS) segment will continue to expand globally with the help of these partnerships and renewed agreements with Credit One and PSCU.

Further, First Data extended partnership with Alibaba’s BABA Alipay, which enables the company to integrate Alipay at its point-of-sale (POS) across 35,000 North American merchants. First Data’ Global Business Solutions (GBS) segment is likely to gain momentum in the soon-to-be reported quarter.

Additionally, acquisitions of CardConnect and BluePay are expected to perform well with First Data’s continuous investment in developing integrated solutions. Thus, GBS North America will continue to improve.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

First Data currently has a Zacks Rank #4 and Earnings ESP of -2.89%. Therefore, an earnings surprise is unlikely for the stock.

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Paycom Software PAYC has an Earnings ESP of +0.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies A has an Earnings ESP of +3.72% and a Zacks Rank #2.

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