After all the market volatility caused by the debate between Donald Trump and Hillary Clinton for the U.S. Presidential election 2016, along with a sudden surge in oil prices and uncertainties surrounding the Fed rate hike, investors’ focus has now shifted to the Q3 earnings season, which is still in its early stages.
Out of the 34 S&P 500 members that have come up with their quarterly numbers, approximately 79.4% have posted positive earnings surprises, while 64.7% surpassed revenue expectations – per the latest Earnings Preview report as of Oct 14. Moreover, earnings for these companies are up 1.3% from the same period last year, while revenues have increased 2.9%.
Though the energy sector is expected to cause most of the damage, with auto and transportation remaining other major growth laggards, we believe that the economic picture will gradually improve, going forward, backed by an improving economy and increasing consumer confidence.
Consumer confidence, which has been on an uptrend, is now at its highest level since the recession. The consumer confidence index surged for the second consecutive month in September, signaling that the economy is improving.
Per the latest report, nearly 13% of the Business Services companies have already reported their third-quarter results, and all of these have surpassed both earnings and revenue estimates. Total earnings for these companies grew 19.8%, while revenues increased 10.3% year over year.
Staffing stocks form part of the Business Services sector. In this space, we have already seen Staffing 360 Solutions, Inc. STAF and Resources Connection, Inc. RECN deliver better-than-expected earnings with their recently reported results.
Let’s see what might be in store for the following staffing stocks when they release their third-quarter 2016 earnings results on Oct 19.
Robert Half International, Inc. RHI, a global staffing firm, has an Earnings ESP of +1.41% and a Zacks Rank #4 (Sell). Our proven model does not conclusively show that Robert Half is likely to 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.
This firm has posted an average negative surprise of 0.3% in the trailing four quarters. The Zacks Consensus Estimate for third-quarter earnings is pegged at 71 cents.
Though Robert Half has witnessed strong year-over-year earnings growth since the past many quarters, driven by solid demand for services provided by skilled professionals as well as a growing labor market in the U.S., the company cannot escape from currency fluctuations and macro-economic pressures. Also, it is expected to incur higher costs in the near term. (Read: What to Expect from Robert Half in Q3 Earnings?).
TrueBlue, Inc.TBI, which is involved in staffing, recruitment process outsourcing, as well as managed services, has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our proven model does not conclusively show that TrueBlue is likely to beat earnings estimates this quarter. The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 75 cents. This staffing firm has delivered an average positive earnings surprise of 4% in the trailing four quarters.
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