The Zacks Business Services sector offers a wide array of services such as staffing, consulting, advertising and marketing, outsourcing, technology, financial transaction, waste removal, business information, and auction and valuation.

The sector has outperformed the Zacks S&P 500 composite over the past year. The sector has gained 0.9% against the S&P 500’s decrease of 6.5% in the said time frame.

What’s Going in Favor of the Sector?

Trump administration’s business-friendly approach, including tax cuts and higher government spending, have kept manufacturing and non-manufacturing activities in good shape, thereby spurring demand for business services.

The Purchasing Managers' Index (PMI) measured by the Institute of Supply Management (ISM) touched 54.1% in December, indicating better economic activity in the manufacturing sector. This marks the 28th consecutive month of manufacturing growth. Also, December was the 107th straight month of growth in non-manufacturing activities, with ISM-measured Non-Manufacturing Index (NMI) touching 57.6%.

What’s in Store for the Sector This Earnings Season?

Per the latest Earnings Preview report, total earnings for the business services sector are expected to be up 10.0% on 4.4% higher revenues. Additionally, the sector is one of the eight (out of the total 16) Zacks sectors expected to register double-digit earnings growth in fourth-quarter 2018.

The primary growth drivers include a healthy economy with decent prospects of job growth, higher disposable income and new business initiatives. An ideal mix of services, effective marketing strategies and the ability to retain and attract new customers is expected to boost profits of sector players.

Given the forecast, it might be a good idea to zero in on some business services stocks that are poised to beat earnings estimates this quarter. An earnings surprise is likely to lead to outperformance in shares.

4 Potential Winners in the Business Services Sector

Picking the right stocks for your portfolio might appear to be a colossal task, given the large number of companies in this arena. Here, the Zacks methodology comes in handy as it helps identify stocks that not only boast solid fundamentals but are also poised to beat estimates this earnings season.

Our research shows that stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have a higher chance — as high as 70% — of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

With the help of the Zacks Stock Screener, we have zeroed in on four promising stocks from the business services sector, which match the abovementioned criteria.

Let’s take a look at them.

Virginia-based, Booz Allen Hamilton (BAH - Free Report) has an Earnings ESP of +4.22% and a Zacks Rank #1. It has market capitalization of $6.88 billion.

The company’s expected earnings growth rate for current quarter is 20.8%. The Zacks Consensus Estimate for current-quarter earnings has increased 1.8% in the past 60 days. The company delivered trailing four-quarter average positive surprise of 16.2%.

The company is slated to release third-quarter fiscal 2019 results on Feb 1.

Booz Allen Hamilton Holding Corporation Price and EPS Surprise

Booz Allen Hamilton Holding Corporation Price and EPS Surprise | Booz Allen Hamilton Holding Corporation Quote

Georgia-based, First Data Corporation (FDC - Free Report) has an Earnings ESP of +4.35% and a Zacks Rank #3. It has market capitalization of $23.53 billion.

The Zacks Consensus Estimate for current-quarter earnings has remained unchanged in the past 60 days. The company delivered a trailing four-quarter average positive surprise of 3.5%.

The company is slated to release fourth-quarter 2018 results on Feb 7.

First Data Corporation Price and EPS Surprise

First Data Corporation Price and EPS Surprise | First Data Corporation Quote

Mastercard Incorporated (MA - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3. It has market capitalization of $209.6 billion.

The company’s expected earnings growth rate for current quarter is 34.2%. The Zacks Consensus Estimate for current-quarter earnings has improved 0.7% in the past 60 days. The company’s trailing four-quarter average positive surprise is 8.8%.

The company is scheduled to report fourth-quarter 2018 results on Jan 31.

Mastercard Incorporated Price and EPS Surprise

Mastercard Incorporated Price and EPS Surprise | Mastercard Incorporated Quote

North Carolina-based, IQVIA Holdings, Inc. (IQV - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #3. It has market capitalization of $25.20 billion.

The company’s expected earnings growth rate for current quarter is 5%. The Zacks Consensus Estimate for current-quarter earnings has remained unchanged in the past 60 days. The company delivered a trailing four-quarter average positive surprise of 3.8%.

The company is expected to report fourth-quarter 2018 results on Feb 13.

IQVIA Holdings Inc. Price and EPS Surprise

IQVIA Holdings Inc. Price and EPS Surprise | IQVIA Holdings Inc. Quote