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Equifax (EFX) Up 32.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 32.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Equifax Tops Q3 Earnings
Equifax reported stellar third-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimates.
Adjusted earnings (excluding 39 cents from non-recurring items) of $1.73 per share beat the Zacks Consensus Estimate by 5.5% but decreased 6.5% on a year-over-year basis.
However, revenues of $1.24 billion beat the consensus estimate by 2.3% and improved 1.8% year over year on a reported basis and 4% on a local-currency basis.
Let’s check out the numbers in detail:
Segmental Revenues
Revenues in the USIS division came in at $397.4 million, down 9% from the year-ago quarter’s level. Within the division, Online Information Solutions’ revenues of $314.4 million were down 6% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $32.1 million declined 31% year over year. Financial Marketing Services’ revenues came in at $50.9 million, down 8% year over year.
Revenues in the International division totaled $288 million, up 6% year over year on a reported basis and 17% on a local-currency basis. The Asia Pacific revenues of $87.1 million fell 2% year over year on a reported basis but grew 6% on a local-currency basis.
Revenues from Europe came in at $80.7 million, up 6% year over year on a reported basis and 24% on a local-currency basis. Latin America revenues of $54 million grew 21% year over year on a reported basis and 34% on a local-currency basis. Canada revenues of $66.2 million were up 9% year over year on a reported basis and 12% on a local-currency basis.
Revenues in the Workforce Solutions segment totaled $558.9 million, up 9% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $454.5 million were up 13% year over year. Employer Services revenues of $104.4 million fell 7% year over year.
Operating Results
Adjusted EBITDA in the third quarter of 2022 came in at $404.9 million, up 1% from the year-ago quarter’s level. Adjusted EBITDA margin fell to 32.5% from 33% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 34.1% compared with 38.8% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.8% compared with 26.7% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 49.5% compared with 53.9% a year ago.
Balance Sheet and Cash Flow
Equifax exited third-quarter 2022 with cash and cash equivalents of $241.7 million compared with $223.6 million at the end of the prior quarter. Long-term debt was $4.82 billion compared with $4.07 billion in the year-ago quarter.
EFX utilized $354.9 million of cash from operating activities while capex was $153 million. Also, Equifax paid out dividends of $47.6 million to its shareholders in the reported quarter.
Fourth-Quarter and Updated 2022 Guidance
For the fourth quarter of 2022, Equifax expects revenues between $1.165 and $1.185 billion.
Adjusted EPS is anticipated in the range of $1.45-$1.55.
For 2022, revenues are now expected between $5.089 billion and $5.109 billion compared with the prior guidance of $5.07-$5.13 billion.
Adjusted EPS is now anticipated in the range of $7.49-$7.59 compared with the prior guidance of $7.55-$7.80.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10.96% due to these changes.
VGM Scores
Currently, Equifax has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equifax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Equifax (EFX) Up 32.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 32.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Equifax Tops Q3 Earnings
Equifax reported stellar third-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimates.
Adjusted earnings (excluding 39 cents from non-recurring items) of $1.73 per share beat the Zacks Consensus Estimate by 5.5% but decreased 6.5% on a year-over-year basis.
However, revenues of $1.24 billion beat the consensus estimate by 2.3% and improved 1.8% year over year on a reported basis and 4% on a local-currency basis.
Let’s check out the numbers in detail:
Segmental Revenues
Revenues in the USIS division came in at $397.4 million, down 9% from the year-ago quarter’s level. Within the division, Online Information Solutions’ revenues of $314.4 million were down 6% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $32.1 million declined 31% year over year. Financial Marketing Services’ revenues came in at $50.9 million, down 8% year over year.
Revenues in the International division totaled $288 million, up 6% year over year on a reported basis and 17% on a local-currency basis. The Asia Pacific revenues of $87.1 million fell 2% year over year on a reported basis but grew 6% on a local-currency basis.
Revenues from Europe came in at $80.7 million, up 6% year over year on a reported basis and 24% on a local-currency basis. Latin America revenues of $54 million grew 21% year over year on a reported basis and 34% on a local-currency basis. Canada revenues of $66.2 million were up 9% year over year on a reported basis and 12% on a local-currency basis.
Revenues in the Workforce Solutions segment totaled $558.9 million, up 9% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $454.5 million were up 13% year over year. Employer Services revenues of $104.4 million fell 7% year over year.
Operating Results
Adjusted EBITDA in the third quarter of 2022 came in at $404.9 million, up 1% from the year-ago quarter’s level. Adjusted EBITDA margin fell to 32.5% from 33% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 34.1% compared with 38.8% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.8% compared with 26.7% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 49.5% compared with 53.9% a year ago.
Balance Sheet and Cash Flow
Equifax exited third-quarter 2022 with cash and cash equivalents of $241.7 million compared with $223.6 million at the end of the prior quarter. Long-term debt was $4.82 billion compared with $4.07 billion in the year-ago quarter.
EFX utilized $354.9 million of cash from operating activities while capex was $153 million. Also, Equifax paid out dividends of $47.6 million to its shareholders in the reported quarter.
Fourth-Quarter and Updated 2022 Guidance
For the fourth quarter of 2022, Equifax expects revenues between $1.165 and $1.185 billion.
Adjusted EPS is anticipated in the range of $1.45-$1.55.
For 2022, revenues are now expected between $5.089 billion and $5.109 billion compared with the prior guidance of $5.07-$5.13 billion.
Adjusted EPS is now anticipated in the range of $7.49-$7.59 compared with the prior guidance of $7.55-$7.80.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -10.96% due to these changes.
VGM Scores
Currently, Equifax has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equifax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.