Reflecting on the fourth quarter of 2024, the U.S. service sector maintained strong momentum, benefiting from economic stability and continued expansion in non-manufacturing activities. Key growth drivers included the accelerating AI revolution, rising demand for cost efficiency, and an increased emphasis on regulatory compliance. Digital transformation remained pivotal, reshaping business operations and enhancing service delivery.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
A number of technology companies are set to report their earnings results over the next couple of weeks. We have picked three technology stocks — Block (XYZ – Free Report) , Coinbase (COIN – Free Report) and V2X (VVX – Free Report) — which are well-poised to beat earnings estimates this season.
Resilient Growth and Strong Service Demand
The economy remained resilient, with GDP growing 2.8% in 2024, slightly below the 2.9% growth recorded in 2023, according to the Bureau of Economic Analysis. Non-manufacturing activities remained robust, as evidenced by the Services PMI, which stayed above the 50% threshold for the 53rd time in 56 months, indicating sustained expansion since the post-pandemic recovery.
Several industry-specific factors fueled growth in the quarter. Essential services, such as waste management, experienced steady demand, while risk mitigation and consulting services saw increased relevance amid evolving regulations. Additionally, companies sought expertise in operational efficiency and cost reduction, reinforcing the demand for specialized service providers.
AI-Driven Innovation Boosts Service Sector
The AI revolution played a transformative role, driving automation, efficiency and innovation across multiple industries. Businesses leveraged AI-driven insights to enhance customer experiences, streamline processes and improve decision-making. The ongoing shift toward digital solutions also bolstered competitiveness across service-oriented businesses.
Multiple service industries, including transportation and warehousing, corporate management, retail and wholesale trade, accommodation and food services, mining, utilities, construction, healthcare, finance, insurance, education, and information services, demonstrated resilience and healthy activity throughout the quarter. Their sustained strength underscores the sector’s crucial role in supporting broader economic stability and growth.
Stocks Poised to Beat This Season
With the existence of a number of players in the sector, finding the right business services stocks that have the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%.
Here are our picks.
Block, Inc. (XYZ – Free Report) : The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $6.2 billion, indicating growth of 8% from the year-ago quarter’s actual. For earnings, the consensus mark is pegged at 82 cents per share, suggesting 82.2% growth from the year-ago quarter’s reported number. The company beat the consensus estimate in three of the past four quarters and missed once, with an average surprise of 9.3%.
XYZ has an Earnings ESP of +1.52% and a Zacks Rank of 3 at present. It is scheduled to declare its fourth-quarter 2024 results on Feb. 20.
Block, Inc. Price and EPS Surprise
Block, Inc. price-eps-surprise | Block, Inc. Quote
Coinbase Global, Inc. (COIN – Free Report) : The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $1.6 billion, indicating growth of 67.2% from the year-ago quarter’s actual. For earnings, the consensus mark is pegged at 87 cents per share, suggesting a 16.4% decline from the year-ago quarter’s reported number. Coinbase surpassed the consensus estimate in the past four quarters, with an average beat of 341.4%.
COIN has an Earnings ESP of +62.12% and a Zacks Rank of 3 at present. It is scheduled to declare its fourth-quarter 2024 results on Feb. 13.
Coinbase Global, Inc. Price and EPS Surprise
Coinbase Global, Inc. price-eps-surprise | Coinbase Global, Inc. Quote
V2X, Inc. (VVX – Free Report) : The Zacks Consensus Estimate for the company’s fourth-quarter 2024 revenues is pegged at $1.1 billion, indicating year-over-year growth of 4.7%. For earnings, the consensus mark is pegged at $1.1, suggesting a 7.4% decline from the year-ago quarter’s reported figure. The company beat the consensus estimate in three of the past four quarters and missed once, with an average surprise of 13.4%.
VVX carries an Earnings ESP of +4.19% and a Zacks Rank of 3 at present. The company is scheduled to declare its fourth-quarter 2024 results on Feb. 24.
V2X, Inc. Price and EPS Surprise
V2X, Inc. price-eps-surprise | V2X, Inc. Quote
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