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Why Is Equifax (EFX) Up 6.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 6.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equifax 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.
Equifax Tops Q2 Earnings
Equifax reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
Adjusted earnings (excluding 46 cents from non-recurring items) of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. The reported figure exceeded the guided range of $1.98-$2.08.
However, revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year on a reported basis and 8% on a local-currency basis. The reported figure falls within the guided range of $1.31-$1.33 billion. Equifax reported its 13 consecutive quarters of double-digit revenue growth.
Let’s check out the numbers in detail:
Segmental Revenues
Revenues in the USIS division came in at $421.4 million, down 8% from the year-ago quarter’s level. Within the division, Online Information Solutions’ revenues of $329.2 million were down 5% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $36.8 million declined 25% year over year. Financial Marketing Services’ revenues came in at $55.4 million, down 5% year over year.
Revenues in the International division totaled $286.1 million, up 3% year over year on a reported basis and 11% on a local-currency basis. Asia Pacific revenues of $90.1 million fell 2% year over year on a reported basis but grew 6% on a local-currency basis.
Revenues from Europe came in at $79.8 million, up 4% year over year on a reported basis and 16% on a local-currency basis. Latin America revenues of $52.2 million grew 18% year over year on a reported basis and 28% on a local-currency basis. Canada revenues of $64 million fell 1% year over year on a reported basis but inched up 2% on a local-currency basis.
Revenues in the Workforce Solutions segment totaled $609.2 million, up 21% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $504.5 million were up 28% year over year. Employer Services revenues of $104.7 million fell 3% year over year.
Operating Results
Adjusted EBITDA in the second quarter of 2022 came in at $461.3 million, up 7% from the year-ago quarter’s level. Adjusted EBITDA margin rose to 35% from 34.9% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 38.2% compared with 38.9% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 24.7% compared with 26.8% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 53.4% compared with 57.5% a year ago.
Balance Sheet and Cash Flow
Equifax exited second-quarter 2022 with cash and cash equivalents of $223.6 million compared with $200.9 million at the end of the prior quarter. Long-term debt was $4.07 billion compared with $4.47 billion in the year-ago quarter.
EFX utilized $275.3 million of cash from operating activities while capex was $158.9 million. Also, Equifax paid out dividends of $47.8 million to its shareholders in the reported quarter.
Third-Quarter and 2022 Guidance
For the third quarter of 2022, Equifax expects revenues between $1.21 and $1.23 billion.
Adjusted EPS is anticipated in the range of $1.60-$1.70.
Equifax lowered its view for 2022. Revenues are now expected between $5.07 billion and $5.13 billion compared with the prior guidance of $5.15-$5.25 billion.
Adjusted EPS is now anticipated in the range of $7.55-$7.80 compared with the prior guidance of $8.00-$8.30.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -13.57% due to these changes.
VGM Scores
At this time, Equifax has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Equifax has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Equifax (EFX) Up 6.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 6.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equifax 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.
Equifax Tops Q2 Earnings
Equifax reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
Adjusted earnings (excluding 46 cents from non-recurring items) of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. The reported figure exceeded the guided range of $1.98-$2.08.
However, revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year on a reported basis and 8% on a local-currency basis. The reported figure falls within the guided range of $1.31-$1.33 billion. Equifax reported its 13 consecutive quarters of double-digit revenue growth.
Let’s check out the numbers in detail:
Segmental Revenues
Revenues in the USIS division came in at $421.4 million, down 8% from the year-ago quarter’s level. Within the division, Online Information Solutions’ revenues of $329.2 million were down 5% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $36.8 million declined 25% year over year. Financial Marketing Services’ revenues came in at $55.4 million, down 5% year over year.
Revenues in the International division totaled $286.1 million, up 3% year over year on a reported basis and 11% on a local-currency basis. Asia Pacific revenues of $90.1 million fell 2% year over year on a reported basis but grew 6% on a local-currency basis.
Revenues from Europe came in at $79.8 million, up 4% year over year on a reported basis and 16% on a local-currency basis. Latin America revenues of $52.2 million grew 18% year over year on a reported basis and 28% on a local-currency basis. Canada revenues of $64 million fell 1% year over year on a reported basis but inched up 2% on a local-currency basis.
Revenues in the Workforce Solutions segment totaled $609.2 million, up 21% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $504.5 million were up 28% year over year. Employer Services revenues of $104.7 million fell 3% year over year.
Operating Results
Adjusted EBITDA in the second quarter of 2022 came in at $461.3 million, up 7% from the year-ago quarter’s level. Adjusted EBITDA margin rose to 35% from 34.9% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 38.2% compared with 38.9% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 24.7% compared with 26.8% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 53.4% compared with 57.5% a year ago.
Balance Sheet and Cash Flow
Equifax exited second-quarter 2022 with cash and cash equivalents of $223.6 million compared with $200.9 million at the end of the prior quarter. Long-term debt was $4.07 billion compared with $4.47 billion in the year-ago quarter.
EFX utilized $275.3 million of cash from operating activities while capex was $158.9 million. Also, Equifax paid out dividends of $47.8 million to its shareholders in the reported quarter.
Third-Quarter and 2022 Guidance
For the third quarter of 2022, Equifax expects revenues between $1.21 and $1.23 billion.
Adjusted EPS is anticipated in the range of $1.60-$1.70.
Equifax lowered its view for 2022. Revenues are now expected between $5.07 billion and $5.13 billion compared with the prior guidance of $5.15-$5.25 billion.
Adjusted EPS is now anticipated in the range of $7.55-$7.80 compared with the prior guidance of $8.00-$8.30.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -13.57% due to these changes.
VGM Scores
At this time, Equifax has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Equifax has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.