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TransUnion Hits 52-Week High on Growing Big Data Market
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Shares of data and analytics solutions provider, TransUnion (TRU - Free Report) scaled a new 52-week high of $44.36 in yesterday’s trading session, before closing a tad lower at $44.30 for a healthy one-year return of 33.6%. 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’s addressable market includes the burgeoning Big Data and analytics, 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 for key insights across industries and geographies.
Research firm, IDC projects that global spending on Big Data and analytics services will witness a compounded annual growth rate of 11.7% and will reach $203 billion in 2020 from $130 billion in 2016. In order to capitalize on the market’s immense growth potential, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
With a core business focus, TransUnion has outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 18.6% compared with 9.4% 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.
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.
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.
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%.
Intertek Group has a healthy long-term earnings growth expectation of 12%
National Research has beaten earnings estimate twice in the trailing four quarters with a positive earnings surprise of 4.4%.
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TransUnion Hits 52-Week High on Growing Big Data Market
Shares of data and analytics solutions provider, TransUnion (TRU - Free Report) scaled a new 52-week high of $44.36 in yesterday’s trading session, before closing a tad lower at $44.30 for a healthy one-year return of 33.6%. 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’s addressable market includes the burgeoning Big Data and analytics, 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 for key insights across industries and geographies.
Research firm, IDC projects that global spending on Big Data and analytics services will witness a compounded annual growth rate of 11.7% and will reach $203 billion in 2020 from $130 billion in 2016. In order to capitalize on the market’s immense growth potential, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
With a core business focus, TransUnion has outperformed the Zacks categorized Business Information Services industry in the last three months, with an average return of 18.6% compared with 9.4% 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.
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.
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.
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) and Intertek Group plc (IKTSY - Free Report) , both carrying a Zacks Rank #2 (Buy), and National Research Corporation , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
S&P Global has a solid long-term earnings growth expectation of 12.3%.
Intertek Group has a healthy long-term earnings growth expectation of 12%
National Research has beaten earnings estimate twice in the trailing four quarters with a positive earnings surprise of 4.4%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>