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IHS Markit (INFO) Up 9.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for IHS Markit (INFO - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is IHS Markit due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

IHS Markit Surpasses Q3 Earnings & Revenue Estimates

IHS Markit reported impressive third-quarter fiscal 2021 results, with both earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings per share of 85 cents beat the consensus mark by 2.4% and increased 10% on a year-over-year basis. Total revenues came in at $1.18 billion, surpassing the consensus mark by 1.1% and increasing 10.3% from the year-ago quarter on a reported basis and 9% organically.

Quarterly Details

Financial services segment’s revenues increased 10% year over year on a reported basis, and 8% on an organic basis, to $490 million. Revenues at the Resources segment totaled $208 million, flat year over year on a reported basis, and declined 1% organically.

The Transportation segment witnessed year-over-year revenue growth of 16% on a reported basis to reach $347 million. Revenues increased 15% organically. Revenues at the Consolidated Markets & Solutions segment amounted to $136 million, up 12% year over year on a reported basis and 11% organically.

Recurring fixed revenues of $860 million were up 8% year over year on a reported basis and 7% organically. Recurring variable revenues of $170 million grew 11% year over year on a reported basis and 8% on an organic basis. Non-recurring revenues totaled $150.5 million, up 21% year over year on a reported basis and 20% organically.

Adjusted EBITDA of $515.6 million was up 6% from the year-ago quarter. Adjusted EBITDA margin declined 162 basis points (bps) year over year to 43.7%.

IHS Markit ended the quarter with cash and cash equivalent balance of $338 million compared with $172 million in the prior quarter. Long-term debt was $4.6 billion, flat with the previous quarter’s figure.

Cash flow from operations and free cash flow amounted to $421 million and $344 million, respectively, in the quarter. CapEx was $77 million. The company paid out $79.8 million in dividends in the quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, IHS Markit has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise IHS Markit has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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