These 2 Business Services Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks Investment Research highlights its Earnings ESP (Expected Surprise Prediction) methodology as a tool for identifying potential earnings beats, noting that a positive ESP combined with a Zacks Rank #3 (Hold) or better has historically yielded positive surprises 70% of the time and 28.3% average annual returns over a decade-long backtest. The firm points to Gen Digital (GEN), with a +1.67% ESP and Zacks Rank #3, and Fidelity National Information Services (FIS), with a +0.67% ESP and Zacks Rank #2, as current examples of business services stocks poised for potential earnings outperformance ahead of their August 2025 reports. This systematic approach aims to provide investors with an edge in anticipating quarterly results.

Analysis

The analysis highlights a quantitative strategy for identifying potential earnings beats, centered on the Zacks Earnings ESP (Expected Surprise Prediction) model. This model, which measures the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate, has historically shown that stocks with a positive ESP and a Zacks Rank of #3 (Hold) or better delivered a positive earnings surprise 70% of the time, leading to backtested average annual returns of 28.3%. The report applies this methodology to two Business Services stocks ahead of their August 2025 earnings. Gen Digital (GEN) is identified with a +1.67% ESP, based on a Most Accurate Estimate of $0.61 versus a consensus of $0.60, and carries a #3 (Hold) rank. Fidelity National Information Services (FIS) is also flagged, holding a more favorable #2 (Buy) rank and a +0.67% ESP, derived from a Most Accurate Estimate of $1.37 against a consensus of $1.36. The core insight is that recent upward analyst revisions for both companies signal a statistically significant probability of them exceeding consensus earnings expectations.

Key Decisions for Investors

• Investors interested in event-driven strategies could consider positions in FIS and GEN ahead of their early August 2025 earnings reports to capitalize on the potential for a positive earnings surprise as identified by the Zacks ESP model.
• Fidelity National Information Services (FIS) may present a more compelling opportunity, as its positive ESP is supported by a stronger Zacks #2 (Buy) rank, suggesting a higher probability of stock outperformance relative to the broader market.
• While Gen Digital (GEN) has a higher ESP percentage, its neutral #3 (Hold) rank implies that even with an earnings beat, the stock may only perform in-line with the market, warranting a more cautious or neutral stance.
• It is crucial to recognize this as a probabilistic approach; the model's 70% historical success rate implies a non-trivial chance of failure, and a positive earnings surprise does not always guarantee a positive share price reaction.