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Equifax (EFX) Q3 Earnings & Revenues Lag Estimates, Stock Down
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Equifax Inc. (EFX - Free Report) reported lower-than-expected results in the third quarter of 2018.
Adjusted earnings of $1.41 per share missed the Zacks Consensus Estimate by a penny and declined 7.8% on a year-over-year basis. The reported figure came in at the lower end of the guided range of $1.39-$1.44 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses weighed on the company’s bottom line.
Revenues totaled $834.2 million, which fell short of the consensus estimate by $23 million and decreased slightly year over year. The top-line figure also came in below the guided range of $853-$863 million. Weakness across International and Global Consumer Solutions resulted in the year-over-year revenue decline. This was partially offset by strength in Workforce Solutions and USIS segments.
Following the quarterly results, shares of Equifax decreased 9.9% in after-hours trading. In a year’s time, the stock has declined 6.9% compared to the 17.7% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues from the USIS division grossed $308.3 million, up slightly from the year-ago quarter number. Within the division, both Online Information Solutions revenues ($222.4 million) and Mortgage Solutions revenues ($39 million) grew 1% year over year. Meanwhile, Financial Marketing Services revenues ($46.9 million) declined 2%. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $235 million, down 2% year over year on a reported basis but up 5% on a constant-currency basis. On the international front, Equifax registered year-over-year revenue decline of 1%, 1% and 11% in Asia-Pacific, Europe and Latin, respectively. On a local-currency basis, revenues from both Asia-Pacific and Latin America grew 7% each, while that from Europe remained flat year over year. Revenues from Canada rose 6% year over year on a reported basis and 11% on a local-currency basis. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment came in at $202.2 million, up 9% from the year-ago quarter figure. This improvement includes Verification Services revenues of $143.9 million (up 11% year over year) and Employer Services revenues of $58.3 million (up 3% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment amounted to $88.7 million, down 12% year over year on a reported as well as local-currency basis. The segment contributed to 11% of total revenues.
Adjusted EBITDA in third-quarter decreased 12% year over year to $275.5 million. Adjusted EBITDA margin was 33% compared with 37.4% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 46.2% compared with 49.2% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 29.4% in third quarter compared with 33.2% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 47.5% compared with 48.6% in the third quarter of 2017. Adjusted EBITDA margin for Global Consumer Solutions was 28.3% compared with 29.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited third-quarter with cash and cash equivalents of $253.4 million, lower than $327.4 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion flat with the prior-quarter number. The company generated $152.6 million of cash from operating activities and spent $89.4 million in capital expenditures. Also, Equifaxpaid dividend of $46.9 million to its shareholders in the quarter.
Guidance
For the fourth quarter of 2018, Equifax expects revenues in the range of $835-$850 million, reflecting a year-over-year local currency growth of 2-4%. The guided range is much below the Zacks Consensus Estimate of $867.1 million. Adjusted EPS is anticipated to be between $1.30 and $1.35, far below the Zacks Consensus Estimate of $1.43.
For 2018, revenues are expected between $3.412 billion and $3.427 billion, below the Zacks Consensus Estimate of $3.47 billion. Adjusted EPS is anticipated to be between $5.70 and $5.75, below the Zacks Consensus Estimate of $5.84.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports of key players like Booz Allen Hamilton Holding (BAH - Free Report) , Waste Connections (WCN - Free Report) and First Data . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29, Waste Connections and First Data will release third-quarter 2018 results on the same day.
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Equifax (EFX) Q3 Earnings & Revenues Lag Estimates, Stock Down
Equifax Inc. (EFX - Free Report) reported lower-than-expected results in the third quarter of 2018.
Adjusted earnings of $1.41 per share missed the Zacks Consensus Estimate by a penny and declined 7.8% on a year-over-year basis. The reported figure came in at the lower end of the guided range of $1.39-$1.44 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses weighed on the company’s bottom line.
Revenues totaled $834.2 million, which fell short of the consensus estimate by $23 million and decreased slightly year over year. The top-line figure also came in below the guided range of $853-$863 million. Weakness across International and Global Consumer Solutions resulted in the year-over-year revenue decline. This was partially offset by strength in Workforce Solutions and USIS segments.
Following the quarterly results, shares of Equifax decreased 9.9% in after-hours trading. In a year’s time, the stock has declined 6.9% compared to the 17.7% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues from the USIS division grossed $308.3 million, up slightly from the year-ago quarter number. Within the division, both Online Information Solutions revenues ($222.4 million) and Mortgage Solutions revenues ($39 million) grew 1% year over year. Meanwhile, Financial Marketing Services revenues ($46.9 million) declined 2%. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $235 million, down 2% year over year on a reported basis but up 5% on a constant-currency basis. On the international front, Equifax registered year-over-year revenue decline of 1%, 1% and 11% in Asia-Pacific, Europe and Latin, respectively. On a local-currency basis, revenues from both Asia-Pacific and Latin America grew 7% each, while that from Europe remained flat year over year. Revenues from Canada rose 6% year over year on a reported basis and 11% on a local-currency basis. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment came in at $202.2 million, up 9% from the year-ago quarter figure. This improvement includes Verification Services revenues of $143.9 million (up 11% year over year) and Employer Services revenues of $58.3 million (up 3% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment amounted to $88.7 million, down 12% year over year on a reported as well as local-currency basis. The segment contributed to 11% of total revenues.
Equifax, Inc. Revenue (TTM)
Equifax, Inc. Revenue (TTM) | Equifax, Inc. Quote
Operating Results
Adjusted EBITDA in third-quarter decreased 12% year over year to $275.5 million. Adjusted EBITDA margin was 33% compared with 37.4% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 46.2% compared with 49.2% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 29.4% in third quarter compared with 33.2% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 47.5% compared with 48.6% in the third quarter of 2017. Adjusted EBITDA margin for Global Consumer Solutions was 28.3% compared with 29.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited third-quarter with cash and cash equivalents of $253.4 million, lower than $327.4 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion flat with the prior-quarter number. The company generated $152.6 million of cash from operating activities and spent $89.4 million in capital expenditures. Also, Equifaxpaid dividend of $46.9 million to its shareholders in the quarter.
Guidance
For the fourth quarter of 2018, Equifax expects revenues in the range of $835-$850 million, reflecting a year-over-year local currency growth of 2-4%. The guided range is much below the Zacks Consensus Estimate of $867.1 million. Adjusted EPS is anticipated to be between $1.30 and $1.35, far below the Zacks Consensus Estimate of $1.43.
For 2018, revenues are expected between $3.412 billion and $3.427 billion, below the Zacks Consensus Estimate of $3.47 billion. Adjusted EPS is anticipated to be between $5.70 and $5.75, below the Zacks Consensus Estimate of $5.84.
Zacks Rank & Upcoming Releases
Equifax currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports of key players like Booz Allen Hamilton Holding (BAH - Free Report) , Waste Connections (WCN - Free Report) and First Data . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29, Waste Connections and First Data will release third-quarter 2018 results on the same day.
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>>