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What You Missed Out by Overlooking Equifax (EFX) Stock

Shares of Equifax Inc. EFX have been gaining solid momentum of late. One of the major reasons behind this could be the company’s better-than-expected fourth-quarter 2015 results that also improved year over year. Also, an encouraging first-quarter and full-year 2016 outlook drove the shares higher.

Notably, the company has gained over 22% since it reported fourth-quarter results on Feb 10. Its adjusted earnings per share from continuing operations of $1.14 surpassed the Zacks Consensus Estimate of $1.11 and surged 11.5% from the year-ago quarter mainly backed by 6.7% revenue growth.

In fact, Equifax has beaten the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 3.95%. Backed by the strong results, the company has issued an encouraging outlook for both the first quarter and the full year.

Furthermore, some of the optimism surrounding the stock may be attributed to the company’s strong correlation to consumer and financial markets as well as its U.S. and European exposure, which is seeing a gradual uptick. Moreover, strategic initiatives, such as product innovation, expansion of data assets through acquisitions and continuous share gains in North America, are encouraging.

Equifax has pursued strategic acquisitions to supplement its core business. Most recently, the company acquired Veda Group Limited, a leading Australian credit information provider, in a transaction that should be accretive to its bottom line in the long run.

In 2014, Equifax had acquired two companies, namely TDX Group, a UK-based debt-management firm, and Forseva, a provider of cloud-based credit management software solutions. The company expects to derive 1–2% revenue growth from these buyouts over the long term.

Apart from these efforts, Equifax also expands internationally through joint ventures that contain its operating costs and do not require integration time while diversifying the revenue source.

The company's policies of regular dividends and share repurchases also keep investors interested in the stock. During 2015, the company paid $137.8 million as dividend and repurchased shares worth $196.3 million.

However, stiff competition and a highly leveraged balance sheet are its primary concerns.

Equifax currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other well-ranked stocks in the same space are Green Dot Corporation GDOT, Fiserv Inc. FISV and Total System Services Inc. TSS. While Green Dot sports a Zacks Rank #1 (Strong Buy), Fiserv and Total System Services have the same Zacks Rank as Equifax.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
EQUIFAX INC (EFX): Free Stock Analysis Report
 
TOTAL SYS SVC (TSS): Free Stock Analysis Report
 
FISERV INC (FISV): Free Stock Analysis Report
 
GREEN DOT CP-A (GDOT): Free Stock Analysis Report
 
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