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Why Is Equifax (EFX) Up 14.9% 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 14.9% 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 Beats on Q1 Earnings
Equifax reported mixed first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
EFX’s adjusted earnings (excluding 50 cents from non-recurring items) were $1.5 per share, beating the Zacks Consensus Estimate by 4.2% and increasing 4.9% from the year-ago quarter. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 6.7% from the year-ago quarter.
Segmental Information
Revenues in the Workforce Solutions segment totaled $602.8 million, up marginally from the year-ago quarter and missing our estimate of $605.3 million. Within the segment, Verification Services’ revenues of $476.5 million increased 5% year over year. Employer Services’ revenues of $126.3 million saw a 10% year-over-year decline.
Revenues in the USIS segment were $465.3 million, up 10% from the year-ago quarter and beating our estimate of $457.5 million. Within the segment, Online Information Solutions’ revenues of $380.2 million moved up 12% from the year-ago quarter. Mortgage Solutions’ revenues of $38 million increased 14% year over year. Financial Marketing Services’ revenues were $47.1 million, which decreased marginally from the year-ago quarter.
Revenues in the International division totaled $321.3 million, gaining 13% and 20% year over year on a reported basis and a local currency basis, respectively, and missing our estimate of $332.1 million. Asia Pacific revenues of $78.2 million declined 13% from the year-ago quarter on a reported basis and 10% on a local currency basis. Revenues from Europe amounted to $86.2 million, up 14% year over year on a reported basis and 10% on a local currency basis. Latin America revenues of $91.1 million grew 65% year over year on a reported basis and more than 100% on a local currency basis. Canada revenues of $65.8 million moved up 4% year over year, both on a reported basis and a local currency basis.
Operating Results
Adjusted EBITDA in the first quarter of 2024 totaled $404.6 million, reflecting a 7% increase from the year-ago quarter. The adjusted EBITDA margin was 29.1%, which decreased 10 basis points from the year-ago quarter.
Workforce Solutions’ adjusted EBITDA margin was 51.1% compared with 50.4% a year ago. Adjusted EBITDA margin for the USIS division was 32.7% compared with 32.6% in the year-ago quarter. The adjusted EBITDA margin for the International segment was 24.3% compared with 23.5% in the year-ago quarter.
Balance Sheet & Cash Flow
EFX exited the first quarter with cash and cash equivalents of $201 million compared with $216.8 billion at the end of the preceding quarter. The company has a long-term debt of $4.7 billion, flat with the preceding quarter.
Cash generated from operating activities amounted to $252.7 million, whereas capital expenditure totaled $131.9 million. The company distributed $48.2 million as dividends in the quarter.
Q2 and 2024 Outlook
For the second quarter of 2024, EFX expects revenues of $1.41-$1.43 billion. It expects adjusted earnings per share (EPS) of $1.65-$1.75.
For 2024, Equifax anticipates revenues of $5.67-$5.77 billion. The company expects adjusted EPS of $7.2-$7.5.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -7.5% due to these changes.
VGM Scores
At this time, Equifax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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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Why Is Equifax (EFX) Up 14.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Equifax (EFX - Free Report) . Shares have added about 14.9% 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 Beats on Q1 Earnings
Equifax reported mixed first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
EFX’s adjusted earnings (excluding 50 cents from non-recurring items) were $1.5 per share, beating the Zacks Consensus Estimate by 4.2% and increasing 4.9% from the year-ago quarter. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 6.7% from the year-ago quarter.
Segmental Information
Revenues in the Workforce Solutions segment totaled $602.8 million, up marginally from the year-ago quarter and missing our estimate of $605.3 million. Within the segment, Verification Services’ revenues of $476.5 million increased 5% year over year. Employer Services’ revenues of $126.3 million saw a 10% year-over-year decline.
Revenues in the USIS segment were $465.3 million, up 10% from the year-ago quarter and beating our estimate of $457.5 million. Within the segment, Online Information Solutions’ revenues of $380.2 million moved up 12% from the year-ago quarter. Mortgage Solutions’ revenues of $38 million increased 14% year over year. Financial Marketing Services’ revenues were $47.1 million, which decreased marginally from the year-ago quarter.
Revenues in the International division totaled $321.3 million, gaining 13% and 20% year over year on a reported basis and a local currency basis, respectively, and missing our estimate of $332.1 million. Asia Pacific revenues of $78.2 million declined 13% from the year-ago quarter on a reported basis and 10% on a local currency basis. Revenues from Europe amounted to $86.2 million, up 14% year over year on a reported basis and 10% on a local currency basis. Latin America revenues of $91.1 million grew 65% year over year on a reported basis and more than 100% on a local currency basis. Canada revenues of $65.8 million moved up 4% year over year, both on a reported basis and a local currency basis.
Operating Results
Adjusted EBITDA in the first quarter of 2024 totaled $404.6 million, reflecting a 7% increase from the year-ago quarter. The adjusted EBITDA margin was 29.1%, which decreased 10 basis points from the year-ago quarter.
Workforce Solutions’ adjusted EBITDA margin was 51.1% compared with 50.4% a year ago. Adjusted EBITDA margin for the USIS division was 32.7% compared with 32.6% in the year-ago quarter. The adjusted EBITDA margin for the International segment was 24.3% compared with 23.5% in the year-ago quarter.
Balance Sheet & Cash Flow
EFX exited the first quarter with cash and cash equivalents of $201 million compared with $216.8 billion at the end of the preceding quarter. The company has a long-term debt of $4.7 billion, flat with the preceding quarter.
Cash generated from operating activities amounted to $252.7 million, whereas capital expenditure totaled $131.9 million. The company distributed $48.2 million as dividends in the quarter.
Q2 and 2024 Outlook
For the second quarter of 2024, EFX expects revenues of $1.41-$1.43 billion. It expects adjusted earnings per share (EPS) of $1.65-$1.75.
For 2024, Equifax anticipates revenues of $5.67-$5.77 billion. The company expects adjusted EPS of $7.2-$7.5.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -7.5% due to these changes.
VGM Scores
At this time, Equifax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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.