Analysts were expecting Sykes Enterprises, Incorporated (SYKE) [Chart - News - Analysis] to report earnings of $0.34 for last quarter, but SYKE beat expectations with actual earnings of $0.46---12 cents above the consensus estimate. SYKE also issued earnings guidance for next quarter that is in line with current analyst expectations.

If you compare last quarter's earnings to the $0.47 the company made per share during the same quarter a year ago, you can see that SYKE’s earnings are down this year.

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Also, if you compare SYKE's 13.75% projected earnings-per-share (EPS) growth rate for the next five years with the projected EPS growth rate of 15.91% for the Business Services industry as a whole during that same time frame, you can see that analysts expect SYKE to underperform the industry in the future---which is a bad sign for the stock.

Drilling down a little deeper into the Business Services industry, you can see how analysts believe SYKE will stack up against some of the other stocks in the industry, like Cintas Corp. (CTAS) [Chart - News - Analysis] and Iron Mountain Inc. (IRM) [Chart - News - Analysis], in the future. Analysts believe CTAS's earnings are going to grow at a rate of 11.40% while IRM's earnings are going to grow at a rate of 14.50%.

Earnings season can be a volatile time in the stock market. Check out these videos and articles to be better prepared to take advantage of the large price moves that tend to accompany earnings announcements.

- Earnings Season is Here - Find Out How to Trade It

- Using Options to Trade Earnings

- Understanding Stock Analyst Research and Recommendations

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Robert W. Baird gave the Business Services industry some good news as it announced it has initiated coverage on one of its stocks.

Cintas Corp. (CTAS) [Chart - News - Analysis] was given a rating of Neutral » Underperform on 9/23/2009---a positive sign for the stock that investors typically welcome. FYI, Robert W. Baird uses the following rating scale when analyzing stocks: Outperform, Neutral, Underperform.

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Cintas Corp. has an average analyst recommendation score of 2.7 and competes for investment dollars with Visa, Inc. (V) [Chart - News - Analysis] and Thomson Reuters Corporation (TRI) [Chart - News - Analysis]---two other stocks in the Business Services industry that have average analyst recommendation scores of 2.0 and 3.0 respectively.

Analyst recommendations are averaged and scored using the following rating scale:

- 1.0 = Strong Buy

- 2.0 = Buy

- 3.0 = Hold

- 4.0 = Sell

- 5.0 = Strong Sell

Why are Upgrades and Initiations Good and Downgrades Bad?

One event that is almost certain to get a reaction from Wall Street is an analyst upgrade or downgrade. Everyone is looking for an edge in the stock market, and quite often, traders turn to stock analysts to get that edge.

Upgrades and coverage initiations are typically good for stocks because they show that analysts either believe that the stock is going to perform better in the future or that the stock is worth covering and providing analysis on.

Downgrades are typically bad for stocks because they show that analysts believe that the stock is going to perform worse in the future.

What is a Stock Analyst?

Check out the Understanding Stock Analyst Research and Recommendations video and article for more info.

A stock analysts is a person---typically employed by a large bank, investment firm or analysis company---who devotes his/her life to learning and making predictions about a company and its future performance.

Stock analysts sift through company reports and filings, talk to company management, probe customers and competitors and basically do whatever they can to find out if a company is healthy and growing or sick and shrinking. Because this is incredibly demanding work, stock analysts typically only monitor one or two companies at a time.

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