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TransUnion (TRU - Free Report) reported third-quarter 2016 adjusted earnings of 38 cents per share, beating the Zacks Consensus Estimate of 34 cents. With this, TransUnion has beaten earnings estimates five times in a row. Robust top-line growth, along with productivity improvement initiatives, drove the company’s profits.
The company generated GAAP net income of $41.2 million as against a loss of $4 million in the year-ago period. Strong growth momentum across USIS and Internationally led to the impressive bottom-line performance. GAAP EPS for the quarter was 22 cents, against a loss of 2 cents in the prior year quarter.
Revenues for the quarter increased 12% year over year to $437.6 million, comfortably beating the Zacks Consensus Estimate of $426 million. On a constant currency basis, the top line rose 13% year over year, driven by growth across all three segments.
Revenues at the USIS segment came in at $273 million, up 14% year over year. Decision Services revenue increased significantly by 19% from the year-ago quarter to $54 million. Marketing Services revenue was $41 million, an increase of 5% from the prior-year quarter. Online Data Services revenue grew 15% year over year to $178 million.
International segment revenues rose 20% year over year to $82 million. However, on a constant currency basis, revenues grew an impressive 22%. While revenues from developed markets increased 17% (17% on a constant currency basis) to $29 million, that from emerging markets went up 21% (up 25% on a constant currency basis) to $53 million. The company saw 11% growth in revenues from the acquisitions.
Revenues at the Consumer Interactive segment came in at $97 million, up 2% year over year, driven by significant revenue growth from both direct and indirect channels.
Margins
Adjusted EBITDA was $166.6 million, an increase of 19% from the prior-year quarter. Adjusted EBITDA margin was 38.1%, an increase of 210 basis points year over year.
The USIS segment’s adjusted operating income grew 10% year over year. The increase was driven by growth in the top line.
The International segment’s adjusted operating margin increased to 46%, driven by strong revenue growth and cost reduction.
The Consumer Interactive segment’s adjusted operating margin rose 11%. The increase was driven by top-line growth as well as improved productivity.
Acquisition and Collaboration
During the quarter, the company took over RTech (Healthcare Revenue Technologies, Inc) to enhance its healthcare business by leveraging data, technology and analytics to help healthcare providers make the most of its lucrative business potential. This is likely to generate incremental revenues during the impending quarter.
Toward the end of the third quarter, TransUnion entered into a strategic partnership with SavvyMoney, wherein both entities will work mutually to enhance their financial data analytical offerings to the customers. The deal is expected to help TransUnion’s consumers get personalized credit information services using SavvyMoney’s highly advanced credit system. Although the deal is likely to have minimal effect on the third-quarter results, it is expected to attract favorable deals for the company in the future and augment its leading position in the market.
Balance Sheet and Cash Flow
As of Sep 30, 2016, TransUnion had cash and cash equivalents of $137.9 million. Long-term debt was $2,338.2 million at quarter end. For the first nine months of the year, cash flow from operating activities was $276.1 million.
Guidance
Based on third-quarter results, TransUnion raised its 2016 guidance. Consolidated revenues are now expected in the range of $1.690 billion and $1.695 billion (up from earlier expectations of $1.665 billion to $1.675 billion), reflecting year-over-year growth of about 13%.
Adjusted EBITDA is now expected to come in the range of $625 million and $627 million (up from the earlier expectation of $613 million to $618 million), up 20% year over year. The outlook for 2016 adjusted earnings per share was raised from $1.30 to $1.34 to a range of $1.42 to $1.43, which now reflects earnings growth of 30–31% year over year.
For the fourth quarter, consolidated revenues are expected to come in the range of $421 million to $426 million (up from $420 million to $425 million), an increase of approximately 9–10% on a constant currency basis from the prior-year quarter. Adjusted EBITDA for the quarter is likely to be in the range of $157.5 million to $159.5 million (from earlier expectation of $155–$158 million), an increase of about 15–16% from the prior-year quarter. Adjusted earnings per share are expected to be between 34–35 cents during the quarter, up 11–15% year over year.
Acacia Research has a modest earnings record, beating estimates once in the four trailing quarters, with an average positive surprise of 92.86%. The company’s share price has increased by approximately 37.53% year to date.
Hooper Holmes is set to report earnings on Nov 10. The company’s share price has increased by approximately 18.89% year to date.
S&P Global has an ESP of +2.99% and is set to report earnings on Nov 3. The company’s share price has increased by approximately 26.44% year to date.
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TransUnion (TRU) Beats Q3 Earnings Estimates, Ups View
TransUnion (TRU - Free Report) reported third-quarter 2016 adjusted earnings of 38 cents per share, beating the Zacks Consensus Estimate of 34 cents. With this, TransUnion has beaten earnings estimates five times in a row. Robust top-line growth, along with productivity improvement initiatives, drove the company’s profits.
The company generated GAAP net income of $41.2 million as against a loss of $4 million in the year-ago period. Strong growth momentum across USIS and Internationally led to the impressive bottom-line performance. GAAP EPS for the quarter was 22 cents, against a loss of 2 cents in the prior year quarter.
Revenues for the quarter increased 12% year over year to $437.6 million, comfortably beating the Zacks Consensus Estimate of $426 million. On a constant currency basis, the top line rose 13% year over year, driven by growth across all three segments.
TRANSUNION Price, Consensus and EPS Surprise
TRANSUNION Price, Consensus and EPS Surprise | TRANSUNION Quote
Segment Details
Revenues at the USIS segment came in at $273 million, up 14% year over year. Decision Services revenue increased significantly by 19% from the year-ago quarter to $54 million. Marketing Services revenue was $41 million, an increase of 5% from the prior-year quarter. Online Data Services revenue grew 15% year over year to $178 million.
International segment revenues rose 20% year over year to $82 million. However, on a constant currency basis, revenues grew an impressive 22%. While revenues from developed markets increased 17% (17% on a constant currency basis) to $29 million, that from emerging markets went up 21% (up 25% on a constant currency basis) to $53 million. The company saw 11% growth in revenues from the acquisitions.
Revenues at the Consumer Interactive segment came in at $97 million, up 2% year over year, driven by significant revenue growth from both direct and indirect channels.
Margins
Adjusted EBITDA was $166.6 million, an increase of 19% from the prior-year quarter. Adjusted EBITDA margin was 38.1%, an increase of 210 basis points year over year.
The USIS segment’s adjusted operating income grew 10% year over year. The increase was driven by growth in the top line.
The International segment’s adjusted operating margin increased to 46%, driven by strong revenue growth and cost reduction.
The Consumer Interactive segment’s adjusted operating margin rose 11%. The increase was driven by top-line growth as well as improved productivity.
Acquisition and Collaboration
During the quarter, the company took over RTech (Healthcare Revenue Technologies, Inc) to enhance its healthcare business by leveraging data, technology and analytics to help healthcare providers make the most of its lucrative business potential. This is likely to generate incremental revenues during the impending quarter.
Toward the end of the third quarter, TransUnion entered into a strategic partnership with SavvyMoney, wherein both entities will work mutually to enhance their financial data analytical offerings to the customers. The deal is expected to help TransUnion’s consumers get personalized credit information services using SavvyMoney’s highly advanced credit system. Although the deal is likely to have minimal effect on the third-quarter results, it is expected to attract favorable deals for the company in the future and augment its leading position in the market.
Balance Sheet and Cash Flow
As of Sep 30, 2016, TransUnion had cash and cash equivalents of $137.9 million. Long-term debt was $2,338.2 million at quarter end. For the first nine months of the year, cash flow from operating activities was $276.1 million.
Guidance
Based on third-quarter results, TransUnion raised its 2016 guidance. Consolidated revenues are now expected in the range of $1.690 billion and $1.695 billion (up from earlier expectations of $1.665 billion to $1.675 billion), reflecting year-over-year growth of about 13%.
Adjusted EBITDA is now expected to come in the range of $625 million and $627 million (up from the earlier expectation of $613 million to $618 million), up 20% year over year. The outlook for 2016 adjusted earnings per share was raised from $1.30 to $1.34 to a range of $1.42 to $1.43, which now reflects earnings growth of 30–31% year over year.
For the fourth quarter, consolidated revenues are expected to come in the range of $421 million to $426 million (up from $420 million to $425 million), an increase of approximately 9–10% on a constant currency basis from the prior-year quarter. Adjusted EBITDA for the quarter is likely to be in the range of $157.5 million to $159.5 million (from earlier expectation of $155–$158 million), an increase of about 15–16% from the prior-year quarter. Adjusted earnings per share are expected to be between 34–35 cents during the quarter, up 11–15% year over year.
TransUnion currently carries a Zacks Rank #2 (Buy). Some other favorably ranked stocks include Hooper Holmes Inc. , S&P Global, Inc. (SPGI - Free Report) and Acacia Research Corp. (ACTG - Free Report) . Each of these stocks hold the same Zacks Rank as TransUnion.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Acacia Research has a modest earnings record, beating estimates once in the four trailing quarters, with an average positive surprise of 92.86%. The company’s share price has increased by approximately 37.53% year to date.
Hooper Holmes is set to report earnings on Nov 10. The company’s share price has increased by approximately 18.89% year to date.
S&P Global has an ESP of +2.99% and is set to report earnings on Nov 3. The company’s share price has increased by approximately 26.44% year to date.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>