We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Equifax (EFX) Earnings and Revenues Beat Estimates in Q4
Read MoreHide Full Article
Investors had mixed reactions on Equifax Inc.’s (EFX - Free Report) latest quarterly results as depicted from yesterday’s late-hour trade. Following the company’s fourth-quarter 2017 results, the stock rose approximately 2.2% but finally closed after hour trading at less than 0.5%. The share price movement apparently reflects uncertainty and cautiousness among investors pertaining to the last year’s data breach incident. However, the credit bureau company’s revenues and non-GAAP earnings per share came ahead of the respective Zacks Consensus Estimate.
In September 2017, Equifax announced that very sensitive personal data of approximately 143 million consumers has been stolen from its database. Thus, analysts and investors waited with bated breath for the credit information provider’s fourth-quarter results, wherein updates on the data breach and its implication on the finances of the company were expected.
During the quarter, the company recorded $26.5 million of costs related to the data breach. Notably, in the third quarter it had incurred $87.5 million owing to the same.
Despite incurring this huge cybersecurity expense, the company managed to record a year-over-year increase of 40.6% in GAAP earnings per share, courtesy of the latest Tax Cuts and Jobs Act benefit which lowered the effective tax rate. The company recorded a one-time tax benefit of $48.3 million due to the recent tax enactment. On a GAAP basis, Equifax reported earnings of $1.42 per share, up from $1.01 posted in the year-ago quarter.
However, on non-GAAP basis (which excludes one-time items including the costs related to data breach and benefit from lower effective tax rate) the company’s non-GAAP earnings came at $1.39 per share, 3 cents lower than the earnings of $1.42 reported in fourth-quarter 2016. Here, it should be noted that the fall would have been much more, but the Securities & Exchange Commission‘s (“SEC”) rule of reporting financial results on non-GAAP basis gave it a scope to somewhat mitigate the debacle. Equifax’s non-GAAP earnings came ahead of the Zacks Consensus Estimate of $1.35.
Diverse opinion among investors following the company’s fourth-quarter results might have led to the volatility in yesterday’s late-hour trade. Furthermore, investors focus will be on the company’s fourth-quarter earnings conference call, which is scheduled to be held today before the market opens, for a better understanding of its growth prospects.
Notably, the stock is on a downtrend since it reported the data-breach incident on Sep 8. It has lost 13.1% of its value since then, while the industry to which it belongs to has gained 19.1%.
Let’s discuss quarterly results in detail.
Revenues
Equifax’s revenues of $838.5 million surpassed the Zacks Consensus Estimate of $825 million marking a year-over-year improvement of 4.7%. However, it should be noted that this was the second slowest growth rate in the last several quarters after the 3.8% it registered in third-quarter 2017.
Lackluster top-line performance was mainly due to the dismal performance at its U.S. Information Solutions (USIS) division which suffered a year-over-year 1% decline in revenues to $313 million, highlighting the impact of the data-breach scandal. The division suffered revenue decline of 9% at Mortgage Solutions Services sub-segment, while sales at Online Information Solutions remained flat year over year and at Financial Marketing Services witnessed 1% increase.
Revenues declined at Global Consumer Solutions and in turn dented overall sales growth. Revenues at this division plunged 2% year over year to $97.3 million.
However, the company’s other segments continue to perform well.
Revenues from the International division (including Europe, the Asia Pacific, Canada and Latin America) advanced 15% year over year to $244.8 million. On a constant-currency basis, revenues increased 12%. The company registered growth at every international region with revenues increasing 10%, 16%, 18% and 17% in Asia-Pacific, Latin America, Canada and Europe, respectively.
Revenues from the Workforce Solutions segment climbed 6% year over year to $183.4 million, primarily on the back of 11% sales growth in Verification Services, partially offset by a 5% decline at Employer Services.
Operating Results
Equifax’s adjusted EBITDA remained flat year over year at $292 million. However, adjusted EBITDA margin contracted 170 basis points (bps) to 34.8%. Adjusted net income came in at $168.6 million or $1.39 per share compared with $172.4 million or $1.42 per share reported a year ago.
Equifax exited the reported quarter with $336.4 million in cash and cash equivalents, up from the previous quarter’s balance of $315.4 million. Total long-term debt (excluding current portion) was $1.74 billion, down from $2.04 billion at the end of previous quarter. During the year ended Dec 31, 2017, Equifax generated cash flow of $816 million from operational activities.
In 2017, the company paid dividend of $187.4 million. Also, Equifax’s board of directors yesterday approved a quarterly cash dividend of 39 cents to be payable on Mar 30 to shareholders of record date as of Mar 12. Notably, the company has a history of paying quarterly dividend for more than 100 years.
Our Take
We believe that due to ongoing uncertainty the company has not provided outlook for the forthcoming quarter. Therefore, we will have to wait for the company’s today’s conference call to have a clearer picture about its future prospects.
Escalating expenses related to the cyber attack will remain a drag on the company’s profitability. We expect the company to incur more expenses in the form of legal and professional services associated with the data-breach incident. Further, its expenses might flare up due to increased investments in IT and security solutions as well as insurance services.
The brand image and creditability of Equifax has been in question and is facing huge customer criticism, while cybersecurity companies are questioning its preparedness and response to the massive data breach. Moreover, with lawmakers and investigating agencies probing the mishap, its troubles are unlikely to end any time soon.
We believe the entire issue may result in loss of customers and the company may also have to make huge compensation to clients. This is feared to have an adverse impact on the company’s financial performance in the near term.
Currently, Equifax carries a Zacks Rank #3 (Hold).
Envestnet, Global Payments and Total System Services have long-term expected growth rates of 15%, 15.8% and 14.6%, respectively.
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
Equifax (EFX) Earnings and Revenues Beat Estimates in Q4
Investors had mixed reactions on Equifax Inc.’s (EFX - Free Report) latest quarterly results as depicted from yesterday’s late-hour trade. Following the company’s fourth-quarter 2017 results, the stock rose approximately 2.2% but finally closed after hour trading at less than 0.5%. The share price movement apparently reflects uncertainty and cautiousness among investors pertaining to the last year’s data breach incident. However, the credit bureau company’s revenues and non-GAAP earnings per share came ahead of the respective Zacks Consensus Estimate.
In September 2017, Equifax announced that very sensitive personal data of approximately 143 million consumers has been stolen from its database. Thus, analysts and investors waited with bated breath for the credit information provider’s fourth-quarter results, wherein updates on the data breach and its implication on the finances of the company were expected.
During the quarter, the company recorded $26.5 million of costs related to the data breach. Notably, in the third quarter it had incurred $87.5 million owing to the same.
Despite incurring this huge cybersecurity expense, the company managed to record a year-over-year increase of 40.6% in GAAP earnings per share, courtesy of the latest Tax Cuts and Jobs Act benefit which lowered the effective tax rate. The company recorded a one-time tax benefit of $48.3 million due to the recent tax enactment. On a GAAP basis, Equifax reported earnings of $1.42 per share, up from $1.01 posted in the year-ago quarter.
However, on non-GAAP basis (which excludes one-time items including the costs related to data breach and benefit from lower effective tax rate) the company’s non-GAAP earnings came at $1.39 per share, 3 cents lower than the earnings of $1.42 reported in fourth-quarter 2016. Here, it should be noted that the fall would have been much more, but the Securities & Exchange Commission‘s (“SEC”) rule of reporting financial results on non-GAAP basis gave it a scope to somewhat mitigate the debacle. Equifax’s non-GAAP earnings came ahead of the Zacks Consensus Estimate of $1.35.
Diverse opinion among investors following the company’s fourth-quarter results might have led to the volatility in yesterday’s late-hour trade. Furthermore, investors focus will be on the company’s fourth-quarter earnings conference call, which is scheduled to be held today before the market opens, for a better understanding of its growth prospects.
Notably, the stock is on a downtrend since it reported the data-breach incident on Sep 8. It has lost 13.1% of its value since then, while the industry to which it belongs to has gained 19.1%.
Let’s discuss quarterly results in detail.
Revenues
Equifax’s revenues of $838.5 million surpassed the Zacks Consensus Estimate of $825 million marking a year-over-year improvement of 4.7%. However, it should be noted that this was the second slowest growth rate in the last several quarters after the 3.8% it registered in third-quarter 2017.
Lackluster top-line performance was mainly due to the dismal performance at its U.S. Information Solutions (USIS) division which suffered a year-over-year 1% decline in revenues to $313 million, highlighting the impact of the data-breach scandal. The division suffered revenue decline of 9% at Mortgage Solutions Services sub-segment, while sales at Online Information Solutions remained flat year over year and at Financial Marketing Services witnessed 1% increase.
Revenues declined at Global Consumer Solutions and in turn dented overall sales growth. Revenues at this division plunged 2% year over year to $97.3 million.
However, the company’s other segments continue to perform well.
Revenues from the International division (including Europe, the Asia Pacific, Canada and Latin America) advanced 15% year over year to $244.8 million. On a constant-currency basis, revenues increased 12%. The company registered growth at every international region with revenues increasing 10%, 16%, 18% and 17% in Asia-Pacific, Latin America, Canada and Europe, respectively.
Revenues from the Workforce Solutions segment climbed 6% year over year to $183.4 million, primarily on the back of 11% sales growth in Verification Services, partially offset by a 5% decline at Employer Services.
Operating Results
Equifax’s adjusted EBITDA remained flat year over year at $292 million. However, adjusted EBITDA margin contracted 170 basis points (bps) to 34.8%. Adjusted net income came in at $168.6 million or $1.39 per share compared with $172.4 million or $1.42 per share reported a year ago.
Equifax, Inc. Price, Consensus and EPS Surprise
Equifax, Inc. Price, Consensus and EPS Surprise | Equifax, Inc. Quote
Balance Sheet & Cash Flow
Equifax exited the reported quarter with $336.4 million in cash and cash equivalents, up from the previous quarter’s balance of $315.4 million. Total long-term debt (excluding current portion) was $1.74 billion, down from $2.04 billion at the end of previous quarter. During the year ended Dec 31, 2017, Equifax generated cash flow of $816 million from operational activities.
In 2017, the company paid dividend of $187.4 million. Also, Equifax’s board of directors yesterday approved a quarterly cash dividend of 39 cents to be payable on Mar 30 to shareholders of record date as of Mar 12. Notably, the company has a history of paying quarterly dividend for more than 100 years.
Our Take
We believe that due to ongoing uncertainty the company has not provided outlook for the forthcoming quarter. Therefore, we will have to wait for the company’s today’s conference call to have a clearer picture about its future prospects.
Escalating expenses related to the cyber attack will remain a drag on the company’s profitability. We expect the company to incur more expenses in the form of legal and professional services associated with the data-breach incident. Further, its expenses might flare up due to increased investments in IT and security solutions as well as insurance services.
The brand image and creditability of Equifax has been in question and is facing huge customer criticism, while cybersecurity companies are questioning its preparedness and response to the massive data breach. Moreover, with lawmakers and investigating agencies probing the mishap, its troubles are unlikely to end any time soon.
We believe the entire issue may result in loss of customers and the company may also have to make huge compensation to clients. This is feared to have an adverse impact on the company’s financial performance in the near term.
Currently, Equifax carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are Envestnet, Inc. (ENV - Free Report) , Global Payments Inc. (GPN - Free Report) and Total System Services Inc. , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Envestnet, Global Payments and Total System Services have long-term expected growth rates of 15%, 15.8% and 14.6%, respectively.
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 4 crypto-related stocks now >>