Equifax Inc.

Estimates have been surging for Equifax Inc. (EFX - Analyst Report) after the company delivered strong fourth quarter results on February 8.

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

Based on current consensus estimates, analysts project 12% EPS growth this year and 11% growth next year. This is in-line with management's target EPS growth rate between 10-13% over the next three years.

On top of this, the company pays a dividend that yields a solid 1.5%.

Company Description

Equifax is one of the three major consumer credit reporting agencies in the United States. It was founded in 1899 and is headquartered in Atlanta, Georgia. It has a market cap of $5 billion.

Fourth Quarter Results

Equifax reported better than expected results for the fourth quarter on February 8. Earnings per share came in at 68 cents, beating the Zacks Consensus Estimate by a penny. It was a 10% increase over the same quarter in 2010.

Revenue rose 10% to $509.7 million, ahead of the Zacks Consensus Estimate of $502.0 million. This was driven in large part by a 13% increase in Total U.S. Consumer Information Solutions.

Meanwhile, the operating margin expanded from 22.8% of revenue to 24.7% in the quarter.

Outlook

Following strong Q4 results, analysts raised their estimates significantly higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $2.82, representing 12% growth over 2011 EPS. The 2013 consensus estimate is currently $3.13, corresponding with 11% growth.

This is in-line with the company's 3-year target of 10-13% EPS growth on revenue growth of 7-10% with steady margin expansion and financial leverage.

Dividend

Equifax also offers a dividend that yields a solid 1.5%.

After holding its quarterly dividend steady at 4 cents per share for several years, Equifax boosted it to 16 cents in late 2010.

Valuation

Although shares are up 7% since the company reported its fourth quarter results, the valuation picture still looks reasonable. Shares trade at 14.9x 12-month forward earnings, in-line with its historical median.

And its price to book ratio of 3.0 is well below its 10-year median of 5.1.

The Bottom Line

With strong EPS growth forecasts, rising estimates, a solid dividend and reasonable valuation, Equifax offers attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.

Read the full analyst report on EFX