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Dun & Bradstreet

by Todd Bunton

February 07, 2011 | Comments : 0 Recommended this article: (0)
DNB

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Dun & Bradstreet ( DNB - Analyst Report ) recently reported fourth quarter earnings per share of $1.92, beating the Zacks Consensus Estimate by 4 cents.

The company also gave 2011 guidance of 6% to 10% EPS growth. This prompted analysts to revise their estimates higher, sending the stock to a Zacks #2 Rank (Buy).

D&B has also been rewarding its shareholders through stock buybacks and dividend increases. It currently yields 1.6%.

Company Description

The Dun & Bradstreet Corporation provides its customers with business information. The company provides solutions to mitigate credit risk, and to increase revenue, cash flow, and profitability.

Fourth Quarter Results

D&B reported fourth quarter EPS of $1.92, beating the Zacks Consensus Estimate by 2%. It was a 10% increase over the same quarter in 2009.

Core revenue was up 7% year-over-year driven by an 8% increase in Risk Management Solutions. The Sales & Marketing Solutions division was up 6%.

Meanwhile, operating income improved 7%.

Outlook

The company stated in its latest earnings release that it expects 2011 EPS growth of 6% to 10%, which comes out to $6.00 to $6.23 per share.

The Zacks Consensus Estimate is toward the lower end of guidance at $6.01, equating to 6% EPS growth. The 2012 estimate is currently $6.91, or 15% higher than 2011.

It is a Zacks #2 Rank (Buy) stock.

Rewarding Shareholders

D&B generated $249 million in free cash flow in 2010 and expects to generate between $240 million and $270 million in 2011. The company has been using its free cash flow to return value to shareholders through stock repurchases and a dividend increase.

For instance, D&B recently announced that it was raising its quarterly dividend from 35 cents per share to 36 cents. This marks the 4th consecutive year of a dividend hike. It currently yields 1.6%.

The company also spent $134.8 million in 2010 buying back approximately 1.8 million shares.

Valuation

Shares of DNB have jumped nearly 30% since September 1.

DNB: The Dun & Bradstreet Corporation

Valuation has remained in-check, however, with shares trading at 14.2x forward earnings, a discount to the industry average of 20.0x.

D&B is headquartered in Short Hills, New Jersey and has a market cap of $4.3 billion.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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