On February 6, before the market opens, Spotify Technology S.A. (NYSE:SPOT) is scheduled to release its financial results for the fourth quarter of 2023. Over the past four quarters, the company has consistently exceeded earnings expectations, boasting an average surprise of 31.4%.

Anticipated Performance in Q4

For the upcoming quarter, the Consensus Estimate places revenue at $3.96 billion, reflecting a robust year-over-year growth of 22.4%. This positive trajectory is expected to be driven by an increase in subscribers and monthly active users, contributing to overall revenue growth. However, it is projected that the average revenue per user may experience a decline, attributed to shifts in product and market mix.

Factors Influencing Gross Margin

Gross margin is expected to see an uptick, primarily influenced by seasonality effects. Historically, the second and fourth quarters exhibit higher gross margins as promotional campaign costs tend to be lower compared to the first and third quarters. Analysts foresee a loss of 8 cents per share for the fourth quarter of 2023, a notable improvement from the $1.43 loss incurred during the same period in 2022.

Exploring Noteworthy Stock Picks

In the expansive Business Services sector, we’ve identified several stocks that our model suggests possess a compelling blend of factors, positioning them favorably for potential earnings outperformance this season.

Waste Connections (NYSE:WCN): The Consensus Estimate for the company’s fourth-quarter revenues stands at $2.03 billion, signaling an 8.6% growth. Earnings are expected to reach $1.08 per share, reflecting a substantial 21.4% increase from the corresponding quarter last year. With a consistent track record, Waste Connections has surpassed the consensus estimate in all of the past four quarters, boasting an average surprise of 1.48%. The company is set to disclose its fourth-quarter results on Feb 13.

Waste Management (NYSE:WM): The Consensus Estimate for the company’s fourth-quarter revenues is forecasted at $5.19 billion, indicating a robust growth of 5.1%.

Earnings are projected to reach $1.52 per share, showcasing a notable 16.9% increase from the same quarter in the previous year. While Waste Management has beaten the consensus estimate in two of the past four quarters and matched it in the other two instances, it maintains a negative average surprise of 1%. The company is scheduled to unveil its fourth-quarter results on Feb 12.

Fidelity National (NYSE:FIS): The Consensus Estimate for the company’s fourth-quarter revenues is marked at $2.52 billion, indicating a decline of 32.2%. Earnings are projected at 95 cents per share, reflecting a 44.4% decrease from the figure reported in the year-ago quarter. Displaying a mixed performance, Fidelity National has beaten the consensus estimate in three of the past four quarters and fallen short in one instance, resulting in an average negative surprise of 7%. The company is scheduled to announce its fourth-quarter results on Feb 12.

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