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Equifax (EFX) to Report Q3 Earnings: What's in the Cards?

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Equifax Inc. (EFX - Free Report) is set to report third-quarter 2016 results on Oct 26. Last quarter, the company posted a positive earnings surprise of 5.2%. Let's see how things are shaping up for this announcement.

Factors to Consider

Equifax posted better-than-expected results for the second quarter, which also registered year-over-year growth.

Recently, Equifax entered into a strategic alliance with BizEquity, a global leader of business valuation knowledge and big data. As per the agreement, the companies will introduce a business valuation tool that will “help financial professionals prospect more effectively and small business owners better understand their business' worth.”

By partnering with BizEquity, Equinix expects to cater to over 900,000 financial professionals. We believe that the agreement will benefit the company by expanding its customer base and boosting its top-line performance.

Management’s efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America, should act as tailwinds. Also, the company’s strong correlation with the consumer and financial markets as well as exposure in the U.S. and Europe are likely to propel growth.

However, competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) , Fiserv Inc. and Moody’s Corp., along with uncertainty in the mortgage sector, raises concerns.

EQUIFAX INC Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Equifax will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Its Earnings ESP is -0.74% as the Most Accurate estimate of $1.35 per share is pegged lower than the Zacks Consensus Estimate of $1.36.

Zacks Rank: Equifax’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies, which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Amazon.com, Inc. (AMZN - Free Report) with Earnings ESP of +10.47% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

HubSpot, Inc. (HUBS - Free Report) with Earnings ESP of +13.89% and a Zacks Rank #3 

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