Total System (TSS) To Report Q2 Earnings: What's In Store?

Payment processor and financial services provider, Total System Services, Inc. TSS, is scheduled to release second-quarter 2017 financial results, after the closing bell, on Jul 25.

Last quarter, Total System surpassed the Zacks Consensus Estimate by 8.22%. Moreover, the company beat earnings estimates in three out of the last four quarters, with an average positive surprise of 3.59%.

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

Factors at Play

Total System’s second-quarter results are expected to witness revenue gains from its Merchant segment on the back of its robust distribution network, product portfolio, channel diversification and fast-growing integrated channel.

Last quarter, the company completed the purchase of an additional 10% ownership of the Central Payment Joint Venture, bringing its ownership level to 85%. Central Payment is expected to deliver strong double-digit growth to its direct business.

We also expect to see higher revenues from the company’s Netspend segment (acquired in 2013) which has been witness revenue growth for the last several consecutive quarters.

Moreover,  we believe that the company will generate strong cash flow like it has been doing for the past many quarters. The company will be using a substantial amount of cash to pay down its debt, because of which it has put on halt its share buyback activity which otherwise would have added to its bottom line.

Earnings Whispers

Our proven model does not conclusively show that Total System is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Total System has an Earnings ESP of 0.00%. This is because the Most Accurate estimate stands at 76 cents per share, which is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Though Total System carries a Zacks Rank #2 (Buy), a 0.00% Earnings ESP makes our surprise prediction difficult.

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

Other Stocks

Here are some companies from the finance sector that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter: 

Aon plc. AON, which is set to report second-quarter earnings on Aug 4, has an Earnings ESP of +0.69% and a Zacks Rank #3.

Cigna Corp. CI, which is set to report second-quarter earnings on Aug 4, has an Earnings ESP of +0.81% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Moody’s Corp. MCO has an Earnings ESP of +4.51% and a Zacks Rank #1. The company is expected to report second-quarter earnings results today after market close.

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