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First Data Corp (FDC): Can Q1 Earnings Pull a Surprise?

First Data Corporation FDC) is set to report first-quarter 2016 results on Apr 25. Last quarter, the company posted a negative surprise of 141.2%.

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

Factors to Consider

First Data Corporation is a commerce-enabling technology and solutions company. It offers merchant transaction processing and acquiring; credit, retail and debit card issuing and processing; prepaid services and check verification, settlement and guarantee services.

First Data posted fourth-quarter loss of 7 cents per share, missing our Zacks Consensus Estimate of $0.17. However, adjusted net income of $299 million was up 58% year over year, driven by improved operating results and lower interest expenses. Also, revenues surpassed our estimate of $1.893 billion, reflecting a 2.8% positive year-over-year change.

The company’s new products, including Clover Go point-of-sale device and continued progress on expense management initiatives will likely post revenue growth and solid margin expansion in the near term, including the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that First Data will beat on earnings this quarter. That 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: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 9 cents. Hence, the difference is 0.00%.

Zacks Rank: First Data has a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Barracuda Networks, Inc. CUDA, with an Earnings ESP of +200.0% and a Zacks Rank #1.The company is slated to report fourth-quarter fiscal 2016 earnings results on Apr 26, 2016

Banc of California, Inc. BANC, with an Earnings ESP of +9.09% and a Zacks Rank #1. The company is set to report first-quarter 2016 earnings results on Apr 21, 2016

Canadian Pacific Railway Limited CP, with an Earnings ESP of +0.48% and a Zacks Rank #1. The company’s second-quarter fiscal 2016 earnings release date is Apr 27, 2016

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CDN PAC RLWY (CP): Free Stock Analysis Report
 
BANC OF CA INC (BANC): Free Stock Analysis Report
 
FIRST DATA CORP (FDC): Free Stock Analysis Report
 
BARRACUDA NTWRK (CUDA): Free Stock Analysis Report
 
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