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Here's Why Investors Should Get Rid of Equifax (EFX) at Present
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Investing in Equifax (EFX - Free Report) may not be an attractive option for some due to the challenges posed by seasonality and foreign exchange rate fluctuations, which can impact the company's financial performance.
Earnings for 2023 are expected to decline 8.3% from the year-ago reported figure.
Factors Working Against EFX
Equifax experiences seasonal fluctuations in its revenue streams. Within the USIS segment, the online consumer information services component sees its lowest revenues in the first quarter of each year due to reduced consumer lending activity during this season. In the Workforce Solutions segment, the Employer Services business unit records lower revenues in the second, third, and fourth quarters compared with the first quarter. Additionally, in the Financial Marketing Services business, revenues from financial wealth asset products and data management services are lower in the first, second, and third quarters when compared with the fourth quarter of the year.
A considerable part of the company's operations is conducted in currencies other than the U.S. dollar, reflecting its global presence. This exposure makes the company vulnerable to the effects of fluctuations in foreign exchange rates, which can significantly influence various aspects of its financial performance. In 2022, foreign exchange fluctuations led to a reduction in revenues amounting to $94.9 million, while in 2021, it resulted in a decrease of $50.4 million in revenues.
However, Equifax serves diverse industries like finance, mortgage and telecom. This broad client base offsets sector-specific weaknesses. Equifax emphasizes growth by expanding unique data assets, using advanced analytics, AI, and ML, and forming partnerships, ensuring resilience and innovation.
Zacks Rank and Stocks to Consider
EFX currently carries a Zacks Rank #4 (Sell). Here are some better-ranked stocks from the broader Business Service sector, which you may consider.
Verisk Analytics (VRSK - Free Report) has beaten the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data (ADP - Free Report) presently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.
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Here's Why Investors Should Get Rid of Equifax (EFX) at Present
Investing in Equifax (EFX - Free Report) may not be an attractive option for some due to the challenges posed by seasonality and foreign exchange rate fluctuations, which can impact the company's financial performance.
Earnings for 2023 are expected to decline 8.3% from the year-ago reported figure.
Factors Working Against EFX
Equifax experiences seasonal fluctuations in its revenue streams. Within the USIS segment, the online consumer information services component sees its lowest revenues in the first quarter of each year due to reduced consumer lending activity during this season. In the Workforce Solutions segment, the Employer Services business unit records lower revenues in the second, third, and fourth quarters compared with the first quarter. Additionally, in the Financial Marketing Services business, revenues from financial wealth asset products and data management services are lower in the first, second, and third quarters when compared with the fourth quarter of the year.
Equifax, Inc. Revenue (Quarterly)
Equifax, Inc. revenue-quarterly | Equifax, Inc. Quote
A considerable part of the company's operations is conducted in currencies other than the U.S. dollar, reflecting its global presence. This exposure makes the company vulnerable to the effects of fluctuations in foreign exchange rates, which can significantly influence various aspects of its financial performance. In 2022, foreign exchange fluctuations led to a reduction in revenues amounting to $94.9 million, while in 2021, it resulted in a decrease of $50.4 million in revenues.
However, Equifax serves diverse industries like finance, mortgage and telecom. This broad client base offsets sector-specific weaknesses. Equifax emphasizes growth by expanding unique data assets, using advanced analytics, AI, and ML, and forming partnerships, ensuring resilience and innovation.
Zacks Rank and Stocks to Consider
EFX currently carries a Zacks Rank #4 (Sell). Here are some better-ranked stocks from the broader Business Service sector, which you may consider.
Verisk Analytics (VRSK - Free Report) has beaten the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data (ADP - Free Report) presently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.