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3 Business Information Stocks to Watch Amid Industry Woes
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The increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to address the pandemic-induced rising demand for services that ensure risk mitigation, cost reduction and productivity improvement.
The heightening technology adoption is benefiting companies like S&P Global Inc. (SPGI - Free Report) , Verisk Analytics, Inc. (VRSK - Free Report) and TransUnion (TRU - Free Report) , supporting them to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment, characterized by evolving customer behavior, preference and demographics. As the effects of the pandemic subside, the key focus within the industry is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making, to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider, S&P Global and a provider of data-analytics solutions, Verisk Analytics.
4 Trends Shaping the Future of the Information Industry
Healthy Demand Environment: The industry is mature and has witnessed a progressively growing business environment in the past few years. Revenues, income and free cash flows are likely to see healthy growth during the post-pandemic economic improvement.
Demand for Customer-Centric Solutions: The pandemic has stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. These, in turn, have opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Digital Transformation is the Key: Companies focused on digital transformation are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates time to market and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: Automation in assembling and the use of big data in enhancing business information will fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #202, which places it in the bottom 20% of more than 250 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business – Information Services industry has outperformed the Zacks Business Services sector but underperformed the S&P 500 composite.
The industry has gained 7.7% compared with the S&P 500 composite and the broader sector’s growth of 14.9% and 3.4%, respectively, in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing business information services stocks, the industry is currently trading at 27.99X compared with the S&P 500’s 19.32X and the sector’s 21.9X.
Over the past five years, the industry has traded as high as 32.34X and as low as 19.91X, with a median of 26.01X, as the charts below show.
Price to Forward 12-Month P/E Ratio
3 Business Information Service Stocks in Focus
Here we have presented three stocks that are well-positioned to grow in the near term.
Verisk Analytics: This provider of data analytics solutions to the insurance markets has a robust growth strategy that focuses on organic growth, product development and acquisitions. Verisk continues to invest in people, data sets, analytic solutions, technology and complementary businesses to keep itself updated with changing requirements in the markets it serves. The company is maintaining its focus on increasing solution penetration with customers, developing new proprietary databases and predictive analytics, and expanding into new customer sectors.
The March 2022 acquisition of Opta has expanded Verisk’s footprint in the Canadian market. Another acquisition, Automated Insurance Solutions, increased the company’s automation capabilities in the claims ecosystem, helping it to expand geographically.
Verisk currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2024 EPS has remained unchanged at $1.36 in the past 60 days. The stock has gained 4.6% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: VRSK
S&P Global: This credit ratings, benchmarks, analytics, and workflow solutions provider is continuously making small but impactful acquisitions to enhance its offerings in private markets, and sustainability and energy transition products. It plans to continue such strategic organic investments and opportunistic acquisitions to increase growth and innovation.
The company recently entered into a long-term strategic partnership with Amazon Web Services, which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to serve customers better by developing new products.
S&P Global currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2023 EPS has increased 0.6% in the past 60 days to $12.52. The stock has gained 16.7% in the past six months.
Price and Consensus: SPGI
TransUnion: This global consumer credit reporting agency has an addressable market that includes the burgeoning Big Data and analytics market, which is expanding at a rapidly accelerating pace as companies realize the advantages of building an analytical enterprise where decisions are derived from data and insights. To capitalize on the immense potential growth, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
The April 2022 acquisition of Verisk Financial Services is helping TransUnion offer enhanced insights and solutions, as well as improve fraud prevention and risk management. The September 2021 acquisition of Neustar has strengthened TRU’s competitive position in the fast-growing digital marketing and identity fraud marketplaces.
TransUnion currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2023 EPS has been revised 1.3% upward in the past 60 days to $5.51. The stock has gained 31.3% in the past six months.
Price and Consensus: TRU
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3 Business Information Stocks to Watch Amid Industry Woes
The increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to address the pandemic-induced rising demand for services that ensure risk mitigation, cost reduction and productivity improvement.
The heightening technology adoption is benefiting companies like S&P Global Inc. (SPGI - Free Report) , Verisk Analytics, Inc. (VRSK - Free Report) and TransUnion (TRU - Free Report) , supporting them to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment, characterized by evolving customer behavior, preference and demographics. As the effects of the pandemic subside, the key focus within the industry is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making, to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider, S&P Global and a provider of data-analytics solutions, Verisk Analytics.
4 Trends Shaping the Future of the Information Industry
Healthy Demand Environment: The industry is mature and has witnessed a progressively growing business environment in the past few years. Revenues, income and free cash flows are likely to see healthy growth during the post-pandemic economic improvement.
Demand for Customer-Centric Solutions: The pandemic has stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. These, in turn, have opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Digital Transformation is the Key: Companies focused on digital transformation are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates time to market and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: Automation in assembling and the use of big data in enhancing business information will fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #202, which places it in the bottom 20% of more than 250 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business – Information Services industry has outperformed the Zacks Business Services sector but underperformed the S&P 500 composite.
The industry has gained 7.7% compared with the S&P 500 composite and the broader sector’s growth of 14.9% and 3.4%, respectively, in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing business information services stocks, the industry is currently trading at 27.99X compared with the S&P 500’s 19.32X and the sector’s 21.9X.
Over the past five years, the industry has traded as high as 32.34X and as low as 19.91X, with a median of 26.01X, as the charts below show.
Price to Forward 12-Month P/E Ratio
3 Business Information Service Stocks in Focus
Here we have presented three stocks that are well-positioned to grow in the near term.
Verisk Analytics: This provider of data analytics solutions to the insurance markets has a robust growth strategy that focuses on organic growth, product development and acquisitions. Verisk continues to invest in people, data sets, analytic solutions, technology and complementary businesses to keep itself updated with changing requirements in the markets it serves. The company is maintaining its focus on increasing solution penetration with customers, developing new proprietary databases and predictive analytics, and expanding into new customer sectors.
The March 2022 acquisition of Opta has expanded Verisk’s footprint in the Canadian market. Another acquisition, Automated Insurance Solutions, increased the company’s automation capabilities in the claims ecosystem, helping it to expand geographically.
Verisk currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2024 EPS has remained unchanged at $1.36 in the past 60 days. The stock has gained 4.6% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: VRSK
S&P Global: This credit ratings, benchmarks, analytics, and workflow solutions provider is continuously making small but impactful acquisitions to enhance its offerings in private markets, and sustainability and energy transition products. It plans to continue such strategic organic investments and opportunistic acquisitions to increase growth and innovation.
The company recently entered into a long-term strategic partnership with Amazon Web Services, which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to serve customers better by developing new products.
S&P Global currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2023 EPS has increased 0.6% in the past 60 days to $12.52. The stock has gained 16.7% in the past six months.
TransUnion: This global consumer credit reporting agency has an addressable market that includes the burgeoning Big Data and analytics market, which is expanding at a rapidly accelerating pace as companies realize the advantages of building an analytical enterprise where decisions are derived from data and insights. To capitalize on the immense potential growth, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.
The April 2022 acquisition of Verisk Financial Services is helping TransUnion offer enhanced insights and solutions, as well as improve fraud prevention and risk management. The September 2021 acquisition of Neustar has strengthened TRU’s competitive position in the fast-growing digital marketing and identity fraud marketplaces.
TransUnion currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2023 EPS has been revised 1.3% upward in the past 60 days to $5.51. The stock has gained 31.3% in the past six months.
Price and Consensus: TRU