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Financial Transaction Stocks to Post Earnings: FISV, FIS, WU

We have another jam-packed earnings schedule for this week wherein some 132 odd S&P 500 companies including financial services companies like Fiserv Inc FISV, Fidelity National Information Services, Inc. FIS and The Western Union Company WU will be reporting their quarterly results. As of Friday, Apr 29, 2016, we have had results from 310 S&P 500 members or 72.8% of the index’s total market capitalization. Total earnings for these index members are down 7.2% from the same period last year on 2.4% lower revenues.

Notably, despite the pull back in estimates, the technology and finance sectors have disappointed investors. The first quarter results for the technology sector were marred by weaker-than-expected numbers from behemoths like Apple AAPL, Microsoft MSFT and Alphabet GOOGL while low interest rates weighed on finance companies’ core lending margins and macro uncertainties dragged down their trading and investment banking businesses.

Tech sector total earnings of the companies, representing 85.3% of the sector’s total market capitalization in the S&P 500 index, were down 5.9% on 0.7% higher revenues. Finance sector total earnings of the companies, representing 72.7% of the sector’s total market capitalization in the S&P 500 index, were down 5.5% on 2.4% lower revenues.

Let’s take a look at how Fiserv and other financial services stocks are poised ahead of their scheduled announcements.

Fiserv Inc: Brookfield, WI based Fiserv provides financial services technology solutions to over 16,000 clients worldwide in the banking, insurance, healthcare and investment industries. The company’s broad customer base and strong contact wins are positives along with accretive acquisitions. However, tightening regulations in banking and intensifying competition can thwart the company’s growth prospects. Currently, Fiserv carries a 0.00% ESP which when combined with Zacks Rank #2 (Buy) makes it difficult to predict earnings beat. (Read: Can Fiserv Pull Off an Earnings Surprise in Q1?).

Fidelity National Information Services: Fidelity’s commanding position in the financial services market, increasing international exposure, recurring revenue model, diversified product portfolio, cost synergies from acquisitions and a loyal customer base are significant positives. However, the business has been impacted by sluggish demand for people-based professional services from its large and global financial institution clients. Currently, Fidelity’s Zacks Rank #3 (Hold) and earnings ESP of +2.70% make us reasonably confident in looking for an earnings beat this quarter. (Read: Fidelity National Q1 Earnings: A Beat in the Cards?)

The Western Union Company: Western Union’s key business, Consumer-to-Consumer, is likely to have witnessed growth in the to-be-reported quarter owing to the healthy rise in worldwide immigration. Even International markets are expected to perform well due to its superior brand value and the lower level of competition it faces compared to the U.S. Nonetheless, challenging global economic growth and currency volatility, high compliance and investment costs are anticipated to mar the company’s bottom line. Currently, Western Union has a 0.00% ESP which when combined with a Zacks Rank #2 makes it difficult to predict earnings beat. (Read: Western Union Q1 Earnings: A Surprise in Store?)

Bottom Line

We do not expect much change in the general trend observed so far this earnings season. Despite widespread growth challenges, there have been numerous positive surprises, especially on the revenue front, as low expectations have provided an easy-to-beat hurdle for most companies. Also, an improving dollar is helping matters to some extent as well.

Stay Tuned! Check later on our full write-up on earnings releases of these stocks.

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APPLE INC (AAPL): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
FIDELITY NAT IN (FIS): Free Stock Analysis Report
 
FISERV INC (FISV): Free Stock Analysis Report
 
WESTERN UNION (WU): Free Stock Analysis Report
 
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
 
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