Fiserv, Inc. FISV, a financial services technology provider, is slated to report first-quarter 2015 results on May 5. Last quarter, the company reported a positive surprise of 0.86%. Also, it delivered positive surprises in two of the last four quarters with an average surprise of 3.30%. Let's see how things are shaping up for this announcement.
Factors to Consider
Fiserv has expanded its foothold in the financial and payment solutions business supported by its broad customer base and various contract wins from the likes of Citizens Bank, U.S. Bank and Swift.
In Dec 2014, the company extended its partnership with a leading integrated risk and finance solutions provider, Primatics Financial. The alliance was extended to provide financial institutions with advanced stress testing solutions in support of macroeconomic and regulatory stress testing. This apart, Fiserv has extended its WireXchange service to Western Union Co. WU to enhance the latter’s offerings. Such initiatives are likely to benefit the company going forward.
However, tightening regulations in the banking and financial services industry is expected to remain a concern in 2015. We also believe that intensifying competition from peers remain a major headwind, going forward.
Earnings Whispers?
Our proven model does not conclusively show that Fiserv will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Ranks #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Fiserv currently has a negative Earnings ESP because the Most Accurate estimate stands at 85 cents, while the Zacks Consensus Estimate is pegged higher at 86 cents. This equates to a difference of -1.16%.
Zacks Rank: Fiserv currently carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative 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.
Stocks to Consider
Here are some other companies which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Skullcandy, Inc. SKUL has an Earnings ESP of +7.69% and a Zacks Rank #1 (Strong Buy).
Treehouse Foods, Inc. THS with an Earnings ESP of +1.72% and a Zacks Rank #3.
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