2 Business Services Firms Poised to Beat Estimates This Earnings Season

The U.S. service sector demonstrated robust momentum in Q1 2025, underpinned by economic stability, a 3% Q2 GDP rebound, and sustained non-manufacturing expansion, with the Services PMI at 50.8%. Key growth drivers included the accelerating AI revolution, rising demand for cost efficiency, and digital transformation across various industries. Amidst this positive backdrop, Zacks analysts identify PagSeguro Digital (PAGS) and Bit Digital (BTBT) as two business services firms well-positioned to exceed earnings estimates this season, based on their proprietary Earnings ESP and Zacks Rank methodology, with PAGS holding a Zacks Rank 2 and an 8.20% ESP, and BTBT a Zacks Rank 3 with a 20.00% ESP.

Analysis

The U.S. service sector shows robust health, supported by a significant rebound in Q2 2025 GDP growth to 3% and a Services PMI of 50.8 in July, marking the 11th month of expansion out of the last 12. This strength is attributed to drivers like AI adoption, demand for cost efficiency, and digital transformation. Against this positive macroeconomic backdrop, two business services firms are highlighted for their potential to exceed upcoming earnings estimates based on a proprietary model. PagSeguro Digital (PAGS) presents a compelling case, supported by a Zacks Rank #2 (Buy), a positive 8.20% Earnings ESP, and a strong history of beating consensus estimates in all of the last four quarters with an average surprise of 8.5%. Although consensus forecasts a minor 3.2% year-over-year decline in EPS, revenue is still projected to grow 2.8%. In contrast, Bit Digital (BTBT) is a more speculative candidate. While it boasts a very high Earnings ESP of +20.00%, it carries a Zacks Rank #3 (Hold) and faces significant fundamental headwinds, with consensus estimates pointing to a 12.4% year-over-year revenue decline and a 200% widening of its loss per share. BTBT's past performance is also inconsistent, having missed estimates in two of the last four quarters.

Key Decisions for Investors

• Investors considering PagSeguro (PAGS) should note its consistent history of earnings beats and positive revenue forecast, positioning it as a potentially more stable play on a positive earnings surprise within the fintech space.
• For Bit Digital (BTBT), the high probability of an earnings beat, indicated by a +20.00% Earnings ESP, must be weighed against its deteriorating fundamentals, including declining revenue and widening losses, making it a high-risk, speculative position for event-driven traders.
• Given that both recommendations are based on a short-term predictive model, investors should prepare for potential volatility around the August 14th earnings announcements and look beyond a single-quarter surprise for long-term thesis validation.
• Continue to monitor key macroeconomic indicators such as the Services PMI, as its sustained expansion above the 50 mark provides a crucial tailwind for the broader business services sector and supports the underlying environment for these companies.