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TransUnion (TRU) Hits 52-Week High on Solid Q1, Bullish View
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Shares of data and analytics solutions provider TransUnion (TRU - Free Report) scaled a new 52-week high of $41.08 in Friday’s trading session for a healthy one-year return of 30.9%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since February. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectations of 12.8%.
Growth Drivers
TransUnion recorded solid first-quarter 2017 results with double digit year-over-year growth in revenues and adjusted earnings on diligent execution of operational plans. Revenues for the quarter increased 12% year over year to $455 million, comfortably beating the Zacks Consensus Estimate of $444 million. Adjusted earnings of 38 cents per share beat the Zacks Consensus Estimate by a couple of cents on robust top-line growth and productivity improvement initiatives.
The company 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 cost structure.
TransUnion’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.
With solid quarterly results, TransUnion increased its earlier guidance for full-year 2017. Consolidated revenues for the full year are expected to be between $1.845 billion and $1.86 billion (a year-over-year increase of 8–9% on constant currency basis), up from $1.835 billion and $1.85 billion expected earlier. Adjusted EPS is expected to be between $1.74 and $1.79 compared with earlier projection in the range of $1.71 to $1.76. This represents year-over-year growth of 16–19%, up from 14–17% expected earlier.
Leveraging strong quarterly results and bullish guidance, TransUnion has outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 23.9% compared with 4.5% 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.
All these factors probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
S&P Global has a solid long-term earnings growth expectation of 12.3%.
Gartner has a healthy long-term earnings growth expectation of 17.3%
CBIZ has a positive earnings surprise of 18.4% in the trailing four quarters.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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TransUnion (TRU) Hits 52-Week High on Solid Q1, Bullish View
Shares of data and analytics solutions provider TransUnion (TRU - Free Report) scaled a new 52-week high of $41.08 in Friday’s trading session for a healthy one-year return of 30.9%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since February. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectations of 12.8%.
Growth Drivers
TransUnion recorded solid first-quarter 2017 results with double digit year-over-year growth in revenues and adjusted earnings on diligent execution of operational plans. Revenues for the quarter increased 12% year over year to $455 million, comfortably beating the Zacks Consensus Estimate of $444 million. Adjusted earnings of 38 cents per share beat the Zacks Consensus Estimate by a couple of cents on robust top-line growth and productivity improvement initiatives.
The company 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 cost structure.
TransUnion’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.
With solid quarterly results, TransUnion increased its earlier guidance for full-year 2017. Consolidated revenues for the full year are expected to be between $1.845 billion and $1.86 billion (a year-over-year increase of 8–9% on constant currency basis), up from $1.835 billion and $1.85 billion expected earlier. Adjusted EPS is expected to be between $1.74 and $1.79 compared with earlier projection in the range of $1.71 to $1.76. This represents year-over-year growth of 16–19%, up from 14–17% expected earlier.
Leveraging strong quarterly results and bullish guidance, TransUnion has outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 23.9% compared with 4.5% 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.
All these factors probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
Stocks to Consider
Some better-ranked stocks in the industry include S&P Global, Inc. (SPGI - Free Report) , Gartner, Inc. (IT - Free Report) and CBIZ, Inc. (CBZ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
S&P Global has a solid long-term earnings growth expectation of 12.3%.
Gartner has a healthy long-term earnings growth expectation of 17.3%
CBIZ has a positive earnings surprise of 18.4% in the trailing four quarters.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>