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Why Is TransUnion (TRU) Up 6.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for TransUnion (TRU - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TransUnion 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.

TransUnion's Q3 Earnings Beat Estimates

TransUnion reported mixed third-quarter 2022 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Quarterly adjusted earnings of 93 cents per share beat the consensus mark by 1.1% but decreased 7.9% year over year. Total revenues of $938.2 million missed the consensus mark by a slight margin but increased 18.5% year over year on a reported basis. Revenues were up 29% on a constant-currency basis and 1% on an organic constant-currency basis, mainly driven by growth in the U.S. Market and Consumer Interactive.

Revenues by Segments

The U.S. Market revenues of $621 million were up 38% year over year on a reported basis but were down 2% on an organic basis. Within the segment, Financial Services revenues of $291 million climbed 5% year over year on a reported basis but declined 4% on an organic basis. Emerging Vertical revenues, including Neustar, Insurance and all other verticals, were $330 million, up 91% on a reported basis and 1% on an organic basis.

International revenues increased 6% year over year on a reported basis and 16% on a constant-currency basis to $189 million. Revenues from Canada increased 6% year over year on a reported basis and 10% on a constant-currency basis to $32 million. Revenues from the United Kingdom came in at $49 million, down 11% on a reported basis but up 4% on a constant-currency basis. Revenues from India increased 29% on a reported basis and 39% on a constant-currency basis to $44 million. Asia-Pacific revenues came in at $20 million, up 20% on a reported basis and 24% on a constant-currency basis.

Revenues from Latin America increased 7% on a reported basis and 13% on a constant-currency basis to $29 million. Africa revenues were up 3% on a reported basis and 18% on a constant-currency basis, to 16 million.

Consumer Interactive segment revenues of $147 million, which include revenues from Sontiq, improved 9% year over year on a reported basis. Revenues declined 9% year over year on an organic basis.

Operating Performance

Adjusted EBITDA was $341 million, up 13% year over year on a reported basis and 15% on a constant-currency basis. Adjusted EBITDA margin came in at 36.3%, down 430 basis points year over year.

Balance Sheet and Cash Flow

TransUnion had $596.1 million in cash and cash equivalents at the end of the quarter compared with $521.8 million at the end of the prior quarter. Long-term debt was $5.8 billion, the same as the prior quarter’s figure. The company generated $190.6 million of cash from operating activities and CapEx was $71.2 million. It paid out $20.3 million in dividends in the quarter.

Outlook

For the fourth quarter of 2022, TransUnion expects revenues to be between $896 million and $916 million. The company anticipates adjusted EPS to be in the range of 80-86 cents.  Adjusted EBITDA is anticipated to be between $318 million and $333 million.

Transunion has reduced its 2022 guidance. The company now expects revenues between $3.704 billion and $3.724 billion compared with the previous guidance of $3.748-$3.798 billion. The company anticipates adjusted EPS to be in the range of $3.63-$3.69 compared with the prior guidance of $3.7-$3.86.  Adjusted EBITDA is now anticipated between $1.343 billion and $1.358 billion compared with the previous guidance of $1.362-$1.399 billion.

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 -7.65% due to these changes.

VGM Scores

At this time, TransUnion has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, 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. It's no surprise TransUnion has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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