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Equifax (EFX) Benefits From Buyouts and Innovation, Debt Ails

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Equifax Inc.’s (EFX - Free Report) shares have gained 70.7% over the past year against 23.3% decline of the industry it belongs to.

The company recently reported third-quarter 2021 adjusted earnings per share of $1.85 that beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.22 billion outpaced the consensus estimate by 3.6%.

What’s Behind the Rally?

Equifax serves a wide range of industries, such as financial, mortgage, consumer, telecommunications, automotive, commercial, retail, government, resellers and others. This diversified client base is quite 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 grown at a compounded annual growth rate (CAGR) of 5.6% in the last five years (2016-2020). Revenues improved 14.5% year over year in the second quarter of 2021. 

Acquisitions, over time, have enabled the company to provide a broad insight into consumer performance, financial status, capabilities of customers and market opportunities. 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.

Equifax’s total debt at the end of third-quarter 2021 was 4.96 billion, up from $3.28 billion at the end of the prior quarter. The company’s cash and cash equivalent of $2.03 billion at the end of the quarter was well below this debt level, underscoring that the company does not have enough cash to meet this debt burden. Further, the cash level cannot even meet the short-term debt of $500.6 million.

Zacks Rank and Other Stocks to Consider

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

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some other top-ranked stocks in the broader Business Services sector are Avis Budget (CAR - Free Report) and Cross Country Healthcare (CCRN - Free Report) , both sporting a Zacks Rank #1, and Charles River Associates (CRAI - Free Report) , carrying a Zacks Rank #2 (Buy).

Avis Budget has an expected earnings growth rate of 420.6% for the current year. The company has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 719.1% in the past year. The company has a long-term earnings growth of 18.8%.

Cross Country Healthcare has an expected earnings growth rate of 447.8% for the current year. The company has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 201.2% in the past year. The company has a long-term earnings growth of 21.5%.

Charles River Associates has an expected earnings growth rate of 61.2% for the current year. The company has a trailing four-quarter earnings surprise of 51%, on average.

Charles River’s shares have surged 120.2% in the past year. The company has a long-term earnings growth of 15.5%.

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