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Momentum

Equifax Inc. (EFX - Analyst Report) is a Zacks Rank #1 (Strong Buy) information solutions provider that has delivered 6 straight quarters with positive earnings surprises. Earnings estimates for 2013 have been heading higher over the past couple of months thanks to improving visibility in the mortgage market and the recent acquisition of the credit services business of Computer Sciences (CSC).

Upbeat Q3

On Oct 24, 2012, Equifax reported third-quarter earnings per share of 75 cents, marking a more than 4% surprise over the Zacks Consensus Estimate and jumping 16.0% from the year-ago quarter.

Revenue grew 10.9% year over year to $543.9 million, due primarily to a 35.0% year-over-year growth in Mortgage Solutions revenue. Equifax witnessed market share gains in the mortgage sector, aided by its newly-launched products and services.

Positive Guidance

Equifax is set to release fourth quarter results on Feb 6, 2013. Currently, the Zacks Consensus Estimate is pegged at 75 cents.

For the fourth quarter, Equifax expects revenue growth of 8.0% to 10.0% from the year-ago quarter, based on contributions from domestic and international businesses and ongoing foreign exchange rates. Excluding the impact of acquisition-related amortization expense, Equifax expects EPS between 72 cents and 76 cents.

Equifax expects mortgage activities to maintain momentum in the coming quarters due to higher estimated home sales.

Earnings Estimates

The Zacks Consensus Estimate for 2012 has been steady at $2.95. However the Zacks Consensus Estimate for 2013 jumped 11.2% to $3.57 over the past 60 days, as 10 of 11 estimates were revised higher. The estimate suggests a 21.0% increase from 2012.

Premium Valuation

Currently, Equifax trades at a P/E multiple of 16.3, a P/S multiple of 3.3 and a P/B of 3.7; all of which are higher than peer group multiples. Equifax’s strong growth prospects indicate room for further expansion.

Additionally, Equifax’s return on equity (ROE), return on asset (ROA) and return on investment (ROI) of 19.4%, 9.9% and 12.7%, respectively, are much better than the industry averages.

The stock is currently trading above its 50 and 200 day moving averages of 55.08 and 49.93, respectively. Equifax has also outperformed peers Automatic Data Processing (ADP), Dun & Bradstreet (DNB) and Alliance Data Systems (ADS) over the last 12 months.

Headquartered in Atlanta, Georgia, Equifax develops solutions that collect, collate and distribute information to more than 500 million consumers and 81 million businesses worldwide. It has five business units, namely U.S. Consumer Information Solutions (USCIS), International, Workforce Solutions, North America Personal Solutions (PSOL) and North America Commercial solutions (NACS). Equifax has a market cap of $6.97 billion.


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