As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the data & business process services industry, including CSG (NASDAQ: CSGS) and its peers.
A combination of increasing reliance on data and analytics across various industries and the desire for cost efficiency through outsourcing could mean that companies in this space gain. As functions such as payroll, HR, and credit risk assessment rely on more digitization, key players in the data & business process services industry could be increased demand. On the other hand, the sector faces headwinds from growing regulatory scrutiny on data privacy and security, with laws like GDPR and evolving U.S. regulations potentially limiting data collection and monetization strategies. Additionally, rising cyber threats pose risks to firms handling sensitive personal and financial information, creating outsized headline risk when things go wrong in this area.
The 11 data & business process services stocks we track reported a mixed Q4. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.3% since the latest earnings results.
Best Q4: CSG (NASDAQ: CSGS)
Powering billions of critical customer interactions annually, CSG Systems (NASDAQ: CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services.
CSG reported revenues of $316.7 million, up 6.5% year on year. This print was in line with analysts’ expectations, and overall, it was an exceptional quarter for the company with a solid beat of analysts’ EPS estimates and full-year revenue guidance exceeding analysts’ expectations.
CSG scored the highest full-year guidance raise of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $60.44.
Is now the time to buy CSG? Access our full analysis of the earnings results here, it’s free.
CoStar (NASDAQ: CSGP)
With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ: CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.
CoStar reported revenues of $709.4 million, up 10.8% year on year, outperforming analysts’ expectations by 0.9%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 1.6% since reporting. It currently trades at $76.71.
Is now the time to buy CoStar? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Dun & Bradstreet (NYSE: DNB)
Known for its proprietary D-U-N-S Number that serves as a unique identifier for businesses worldwide, Dun & Bradstreet (NYSE: DNB) provides business decisioning data and analytics that help companies evaluate credit risks, verify suppliers, enhance sales productivity, and gain market visibility.
Dun & Bradstreet reported revenues of $631.9 million, flat year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
Dun & Bradstreet delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 16.7% since the results and currently trades at $8.75.
Read our full analysis of Dun & Bradstreet’s results here.
EXL (NASDAQ: EXLS)
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ: EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
EXL reported revenues of $481.4 million, up 16.3% year on year. This print topped analysts’ expectations by 1.1%. Aside from that, it was a slower quarter as it logged a miss of analysts’ full-year EPS guidance estimates.
EXL pulled off the fastest revenue growth among its peers. The stock is down 7.8% since reporting and currently trades at $44.89.
Read our full, actionable report on EXL here, it’s free.
ADP (NASDAQ: ADP)
Processing one out of every six paychecks in the United States, ADP (NASDAQ: ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
ADP reported revenues of $5.05 billion, up 8.1% year on year. This number beat analysts’ expectations by 1.7%. Overall, it was a very strong quarter as it also logged revenue guidance for next quarter beating analysts’ expectations and a decent beat of analysts’ EPS estimates.
The stock is down 5.2% since reporting and currently trades at $282.69.
Read our full, actionable report on ADP here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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