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TransUnion (TRU) Hits New 52-Week High on Bullish Trends
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Shares of data and analytics solutions provider TransUnion (TRU - Free Report) scaled a 52-week high of $38.53 during yesterday’s trading session, before closing a notch lower at $38.51 with a healthy one-year return of 38.1%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since February. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectations of 12.8%.
Growth Drivers
The company’s addressable market includes the burgeoning Big Data and analytics corner, which is expanding rapidly as companies comprehend the advantages of building an analytical enterprise where decisions are derived from data and insights. Numerous underlying trends are supporting this market growth, including the creation of massive amounts of data, advances in technology and analytics that allow data to be processed more swiftly and efficiently, and surging demand for these business insights across industries and geographies.
Research firm, IDC projects that global spending on Big Data and analytics services will grow at a compounded annual growth rate (“CAGR”) of 11.7%, and will reach $203 billion in 2020 from $130 billion in 2016. In order to capitalize on the immense potential growth in this market, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
The company’s gigantic treasure trove of data is its most distinguishing asset and is perhaps the biggest barrier to entry for competitors. TransUnion has over 30 petabytes of data, growing at an average of over 25% annually since 2010. Acquiring or building such data involves huge costs, making it extremely difficult for a new company to build the contacts and data that TransUnion already has. This fortifies TransUnion's ability to sustain its competitive advantage and protect its market share.
TransUnion outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 24.5% compared with 9.1% gain for the latter. As emerging market economies continue to develop and mature, the company is well-positioned to gain from the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion’s consumer solutions. Further, businesses are also seeing increasingly complex regulations, such as new capital requirements and the Dodd-Frank. This further boosts demand for TransUnion’s services.
In addition, TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flows. The inherent nature and significance of its solutions in customers’ decision-making endow it with high customer retention and revenue visibility. Impressively, it deals with the 10 largest U.S. banks, the top five credit card issuers, the biggest 25 auto lenders and thousands of healthcare providers and federal, state and local government agencies. Also, the company keeps making significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. This enables TransUnion to expand its business and improve its cost structure.
All these measures probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
National Research is currently trading at a forward P/E of 41.2x.
Recruit Holdings is currently trading at a forward P/E of 34.9x.
Exponent has a long-term earnings growth expectation of 12%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.3%.
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TransUnion (TRU) Hits New 52-Week High on Bullish Trends
Shares of data and analytics solutions provider TransUnion (TRU - Free Report) scaled a 52-week high of $38.53 during yesterday’s trading session, before closing a notch lower at $38.51 with a healthy one-year return of 38.1%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since February. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectations of 12.8%.
Growth Drivers
The company’s addressable market includes the burgeoning Big Data and analytics corner, which is expanding rapidly as companies comprehend the advantages of building an analytical enterprise where decisions are derived from data and insights. Numerous underlying trends are supporting this market growth, including the creation of massive amounts of data, advances in technology and analytics that allow data to be processed more swiftly and efficiently, and surging demand for these business insights across industries and geographies.
Research firm, IDC projects that global spending on Big Data and analytics services will grow at a compounded annual growth rate (“CAGR”) of 11.7%, and will reach $203 billion in 2020 from $130 billion in 2016. In order to capitalize on the immense potential growth in this market, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
The company’s gigantic treasure trove of data is its most distinguishing asset and is perhaps the biggest barrier to entry for competitors. TransUnion has over 30 petabytes of data, growing at an average of over 25% annually since 2010. Acquiring or building such data involves huge costs, making it extremely difficult for a new company to build the contacts and data that TransUnion already has. This fortifies TransUnion's ability to sustain its competitive advantage and protect its market share.
TransUnion outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 24.5% compared with 9.1% gain for the latter. As emerging market economies continue to develop and mature, the company is well-positioned to gain from the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion’s consumer solutions. Further, businesses are also seeing increasingly complex regulations, such as new capital requirements and the Dodd-Frank. This further boosts demand for TransUnion’s services.
In addition, TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flows. The inherent nature and significance of its solutions in customers’ decision-making endow it with high customer retention and revenue visibility. Impressively, it deals with the 10 largest U.S. banks, the top five credit card issuers, the biggest 25 auto lenders and thousands of healthcare providers and federal, state and local government agencies. Also, the company keeps making significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. This enables TransUnion to expand its business and improve its cost structure.
All these measures probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
Other Stocks to Consider
Some other favorably ranked stocks in the industry include National Research Corporation , Recruit Holdings Co.,Ltd. (RCRRF - Free Report) and Exponent, Inc. (EXPO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
National Research is currently trading at a forward P/E of 41.2x.
Recruit Holdings is currently trading at a forward P/E of 34.9x.
Exponent has a long-term earnings growth expectation of 12%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.3%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>