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Here's Why You Should Hold on to Equifax (EFX) Stock For Now

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Equifax Inc.’s (EFX - Free Report) shares have charted a solid trajectory over the past year, appreciating 67.9% against 6.2% decline of the industry it belongs to and 34.8% rally of the Zacks S&P 500 index.

The company has a long-term (three to five years) expected EPS growth rate of 14.8%. Its earnings are expected to register 6.9% growth in 2021 and 21.3% in 2022.

Equifax has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

Equifax, Inc. Price, Consensus and EPS Surprise Equifax, Inc. Price, Consensus and EPS Surprise

Equifax, Inc. price-consensus-eps-surprise-chart | Equifax, Inc. Quote

Factors That Auger Well

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 past few years. Total revenues have increased at a compounded annual growth rate of 5.6% from 2016 to 2020. Revenues improved 26% year over year in the second 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.

Some Risks

Equifax’s cash and cash equivalent of $458 million at the end of the second quarter was well below the long-term debt level of $3.3 billion, underscoring that the company does not have enough cash to meet this debt burden. The cash level cannot even meet the short-term debt of $601 million.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup (MAN - Free Report) , Cross Country Healthcare (CCRN - Free Report)  and Genpact (G - 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 ManpowerGroup, Cross Country Healthcare and Genpact is pegged at 24.2%, 9.9% and 14.7%, respectively