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Equifax (EFX) to Post Q2 Earnings: What's in the Cards?

Equifax Inc. EFX is scheduled to report second-quarter 2017 results on Jul 26. Last quarter, the company posted a positive earnings surprise of 2.13%. Notably, Equifax outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive earnings surprise of 4.02%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Equifax posted better-than-expected results for the first quarter. Earnings and revenues both recorded year-over-year growth.

In a recent development, Equifax entered into a definitive agreement to acquire ID Watchdog.  Further, the company expanded its strategic alliance with BizEquity, a global leader of business valuation knowledge and big data. The moves are aimed at boosting Equifax’s capabilities to serve its customers better.

We believe that management’s efforts, such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America, should act as tailwinds. Moreover, the company’s strong correlation with the consumer and financial markets along with exposure in the U.S. and Europe are likely to propel growth, moving ahead.

However, we expect the company’s investments in new initiatives to weigh on its upcoming quarterly earnings. Additionally, uncertainty surrounding IT spending and the strengthening U.S. dollar are some concerns. Moreover, increasing competition from the likes of Fiserv FISV and Total System Services are the other factors likely to affect earnings in the near term.

Equifax, Inc. Price and EPS Surprise


Earnings Whispers

Our proven model does not conclusively show that Equifax is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.57 per share. Hence, the difference is 0.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Equifax carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Vertex Pharmaceuticals Incorporated VRTX, with an Earnings ESP of +33.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegiant Travel Company ALGT, with an Earnings ESP of +0.34% and a Zacks Rank #2.

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