Back to top

Image: Bigstock

Here's Why You Should Retain Equifax (EFX) in Your Portfolio

Read MoreHide Full Article

Equifax Inc.’s (EFX - Free Report) stock has had an impressive run on the bourse over the past year. Shares have gained 42.4%, significantly, outperforming the 16.6% rally of the industry it belongs to. The company has a long-term (three to five years) expected EPS growth rate of 14%.

What’s Behind the Rally?

Equifax serves a wide range of industries, such as financial, mortgage, consumer, employees, telecommunications, automotive, commercial, retail, government, resellers and others. This diversified client base is extremely beneficial, as weakness in any sector can be balanced with strength in the others.

The company’s top line has shown decent growth rates in the last few years. Total revenues have grown at a compounded annual growth rate (CAGR) of 5.6% in the last five years (2016-2020). Revenues improved 26.6% year over year in the first quarter of 2021. 

We believe synergies from acquisitions, in addition to continued general consumer credit activity, product innovation, initiatives to foster enterprise growth and efficient business executions, will continue to drive Equifax’s revenues over the long run.

Debt Woes Stay

Equifax’s cash and cash equivalent of $766 million at the end of the first quarter was well below the long-term debt level of $3.3 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level cannot even meet the short-term debt of $1.1 billion.

Zacks Rank and Stocks to Consider

Equifax currently carries a Zacks Rank #3 (Hold).

Investors interested in the broader Zacks Business Services sector can consider stocks like The Interpublic Group of Companies, Inc. (IPG - Free Report) , Cross Country Healthcare (CCRN - Free Report) and Charles River Associates (CRAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for The Interpublic Group of Companies, Cross Country Healthcare and Charles River is pegged at 10.2%, 10.5% and 15.5%, respectively.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.

Click here to download this report FREE >>