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Why Is Equifax (EFX) Up 12% 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 12% 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 Lags in Q3 Earnings
Equifax Inc. reported lower-than-expected third-quarter 2023 results.
Adjusted earnings (excluding 45 cents from non-recurring items) came in at $1.76 per share, missing the Zacks Consensus Estimate by 1.1% but increasing 1.7% from the year-ago figure.
Total revenues of $1.32 billion missed the consensus estimate by 0.7% and increased 6% from the year-ago figure on a reported basis and 6.5% on a local currency basis.
Segmental Information
Revenues in the Workforce Solutions segment totaled $577.2 million, up 3% from the year-ago quarter’s figure but missed our estimated $602.2 million. Within the segment, Verification Services’ revenues of $459.3 million were up 1% year over year. Employer Services’ revenues of $117.9 million were up 13% year over year.
Revenues in the USIS segment were $426 million, which were up 7% from the year-ago quarter’s level and beat our estimate by 0.9%. Within the segment, Online Information Solutions’ revenues of $348.2 million were up 11% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $27.3 million declined 15% year over year. Financial Marketing Services’ revenues were $50.5 million, decreasing 1% year over year.
Revenues in the International division totaled $315.9 million, gaining 10% and 12% year over year on a reported basis and a local-currency basis, respectively. Revenues from the International segment beat our estimate by 5.3%. Asia Pacific revenues of $85.5 million declined 2% from the year-ago reported figure on a reported basis but were up 2% on a local-currency basis.
Revenues from Europe amounted to $85.2 million, down 6% year over year on a reported basis and 2% on a local-currency basis. Latin America revenues of $80.1 million grew 48% year over year on a reported basis and 62% on a local-currency basis. Canada revenues of $65.1 million were down 2% year over year on a reported basis and were flat on a local-currency basis.
Operating Results
Adjusted EBITDA in the third quarter of 2023 totaled $436.1 million, reflecting an 8% increase from the year-ago quarter’s level and beating our estimate by 1.1%. Adjusted EBITDA margin was 33.1%, which was up 60 basis points from the year-ago reported figure. The figure beat our estimated 29.1%.
Workforce Solutions’ adjusted EBITDA margin was 50.9% compared with 49.5% a year ago. Adjusted EBITDA margin for the USIS division was 34.2% compared with 34.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.2% compared with 26.8% in the prior-year quarter.
Balance Sheet & Cash Flow
EFX exited the third quarter with cash and cash equivalents of $412.6 million. Equifax generated $381.7 million in cash from operating activities in the quarter. The company has a long-term debt of $5.5 billion, which is the same as the quarter-ago reported figure. Capital expenditures were $134.3 million. The company distributed $48.1 million as dividend during the quarter.
Q4 and 2023 Outlook
For the fourth quarter of 2023, revenues are expected to be in the $1.31-$1.33 billion band. Adjusted earnings per share (EPS) are expected to be in the range of $1.72-$1.82.
For 2023, revenues are expected in the range of $5.25-$5.27 billion. Adjusted EPS is expected to be in the range of $6.62-$6.72.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -13.37% 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 F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Equifax (EFX) Up 12% Since Last Earnings Report?
A month has gone by since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 12% 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 Lags in Q3 Earnings
Equifax Inc. reported lower-than-expected third-quarter 2023 results.
Adjusted earnings (excluding 45 cents from non-recurring items) came in at $1.76 per share, missing the Zacks Consensus Estimate by 1.1% but increasing 1.7% from the year-ago figure.
Total revenues of $1.32 billion missed the consensus estimate by 0.7% and increased 6% from the year-ago figure on a reported basis and 6.5% on a local currency basis.
Segmental Information
Revenues in the Workforce Solutions segment totaled $577.2 million, up 3% from the year-ago quarter’s figure but missed our estimated $602.2 million. Within the segment, Verification Services’ revenues of $459.3 million were up 1% year over year. Employer Services’ revenues of $117.9 million were up 13% year over year.
Revenues in the USIS segment were $426 million, which were up 7% from the year-ago quarter’s level and beat our estimate by 0.9%. Within the segment, Online Information Solutions’ revenues of $348.2 million were up 11% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $27.3 million declined 15% year over year. Financial Marketing Services’ revenues were $50.5 million, decreasing 1% year over year.
Revenues in the International division totaled $315.9 million, gaining 10% and 12% year over year on a reported basis and a local-currency basis, respectively. Revenues from the International segment beat our estimate by 5.3%. Asia Pacific revenues of $85.5 million declined 2% from the year-ago reported figure on a reported basis but were up 2% on a local-currency basis.
Revenues from Europe amounted to $85.2 million, down 6% year over year on a reported basis and 2% on a local-currency basis. Latin America revenues of $80.1 million grew 48% year over year on a reported basis and 62% on a local-currency basis. Canada revenues of $65.1 million were down 2% year over year on a reported basis and were flat on a local-currency basis.
Operating Results
Adjusted EBITDA in the third quarter of 2023 totaled $436.1 million, reflecting an 8% increase from the year-ago quarter’s level and beating our estimate by 1.1%. Adjusted EBITDA margin was 33.1%, which was up 60 basis points from the year-ago reported figure. The figure beat our estimated 29.1%.
Workforce Solutions’ adjusted EBITDA margin was 50.9% compared with 49.5% a year ago. Adjusted EBITDA margin for the USIS division was 34.2% compared with 34.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.2% compared with 26.8% in the prior-year quarter.
Balance Sheet & Cash Flow
EFX exited the third quarter with cash and cash equivalents of $412.6 million. Equifax generated $381.7 million in cash from operating activities in the quarter. The company has a long-term debt of $5.5 billion, which is the same as the quarter-ago reported figure. Capital expenditures were $134.3 million. The company distributed $48.1 million as dividend during the quarter.
Q4 and 2023 Outlook
For the fourth quarter of 2023, revenues are expected to be in the $1.31-$1.33 billion band. Adjusted earnings per share (EPS) are expected to be in the range of $1.72-$1.82.
For 2023, revenues are expected in the range of $5.25-$5.27 billion. Adjusted EPS is expected to be in the range of $6.62-$6.72.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -13.37% 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 F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.