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Equifax Benefits From Strategic Buyouts Amid Declining Liquidity
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Equifax Inc. (EFX - Free Report) benefits from its disciplined acquisition strategy, enabling it to expand internationally. Statistical tools used by the company enable it to provide innovative insights to its clients. Meanwhile, seasonality and low liquidity cast a shadow on the company’s performance.
EFX reported mixed third-quarter 2024 results. Adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, outpacing the Zacks Consensus Estimate by a slight margin and increasing 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis.
How is Equifax Performing?
Equifax supplements its primary business by conducting strategic buyouts. Over time, acquisitions have helped EFX provide a holistic view of consumer performance, financial status, capabilities of customers, and market opportunities.
In 2023, Boa Vista Servicos was acquired, strengthening Equifax’s presence in Brazil and enabling the customers of the acquired company to use EFX’s capabilities. Also, Midigator LLC and Efficient Hire were acquired by the company in 2022. Midigator LLC expanded Equifax’s global footprint in the digital sphere and fraud prevention solutions, while Efficient Hire expanded its portfolio of employer and HR-focused solutions and enhanced its ability to assist clients in managing their hiring and employment requirements.
The services provided by Equifax are extremely important to its customers as it uses credit information and related analytical services and data to process applications for new credit cards, automobile loans, home and equity loans, and other consumer loans.
The company utilizes advanced statistical techniques and proprietary tools to evaluate all available information, creating customized reports, decision-making solutions, and processing services. This assists customers to understand, manage, and protect their client’s information and make more informed financial decisions. We anticipate that a solid product portfolio and a clear picture of the sector will keep Equifax ahead of its peers.
EFX works with a diversified customer base as it provides services to a diverse array of industries, including finance, mortgage, consumer, employee, telecommunications, automotive, commercial, retail, government, resellers, and more. This broad client base is highly advantageous as it tackles the risks in any sector by capitalizing on strengths in others.
Equifax's strategy aims to expand and fortify its client base by actively delivering multi-data solutions, which involves expanding its unique data assets and enhancing its analytics capabilities. This expansion strategy is achieved through organic growth, strategic mergers and acquisitions and collaborative partnerships.
Risks Faced by Equifax
Revenues generated from financial wealth asset products and data management services in Equifax’s Financial Marketing Services business are lower in the first, second, and third quarters compared with the fourth quarter of the year. Seasonality acts as an obstacle to project its prospects. We expect year-over-year comparisons to be more insightful for this company due to seasonal fluctuation.
Equifax's current ratio (a measure of liquidity) at the end of third-quarter 2024 was 0.88, lower than 1.01 in the year-ago quarter. A current ratio of less than 1 indicates that the company may have problems paying its short-term obligations.
Image: Bigstock
Equifax Benefits From Strategic Buyouts Amid Declining Liquidity
Equifax Inc. (EFX - Free Report) benefits from its disciplined acquisition strategy, enabling it to expand internationally. Statistical tools used by the company enable it to provide innovative insights to its clients. Meanwhile, seasonality and low liquidity cast a shadow on the company’s performance.
EFX reported mixed third-quarter 2024 results. Adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, outpacing the Zacks Consensus Estimate by a slight margin and increasing 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis.
How is Equifax Performing?
Equifax supplements its primary business by conducting strategic buyouts. Over time, acquisitions have helped EFX provide a holistic view of consumer performance, financial status, capabilities of customers, and market opportunities.
In 2023, Boa Vista Servicos was acquired, strengthening Equifax’s presence in Brazil and enabling the customers of the acquired company to use EFX’s capabilities. Also, Midigator LLC and Efficient Hire were acquired by the company in 2022. Midigator LLC expanded Equifax’s global footprint in the digital sphere and fraud prevention solutions, while Efficient Hire expanded its portfolio of employer and HR-focused solutions and enhanced its ability to assist clients in managing their hiring and employment requirements.
The services provided by Equifax are extremely important to its customers as it uses credit information and related analytical services and data to process applications for new credit cards, automobile loans, home and equity loans, and other consumer loans.
The company utilizes advanced statistical techniques and proprietary tools to evaluate all available information, creating customized reports, decision-making solutions, and processing services. This assists customers to understand, manage, and protect their client’s information and make more informed financial decisions. We anticipate that a solid product portfolio and a clear picture of the sector will keep Equifax ahead of its peers.
EFX works with a diversified customer base as it provides services to a diverse array of industries, including finance, mortgage, consumer, employee, telecommunications, automotive, commercial, retail, government, resellers, and more. This broad client base is highly advantageous as it tackles the risks in any sector by capitalizing on strengths in others.
Equifax's strategy aims to expand and fortify its client base by actively delivering multi-data solutions, which involves expanding its unique data assets and enhancing its analytics capabilities. This expansion strategy is achieved through organic growth, strategic mergers and acquisitions and collaborative partnerships.
Risks Faced by Equifax
Revenues generated from financial wealth asset products and data management services in Equifax’s Financial Marketing Services business are lower in the first, second, and third quarters compared with the fourth quarter of the year. Seasonality acts as an obstacle to project its prospects. We expect year-over-year comparisons to be more insightful for this company due to seasonal fluctuation.
Equifax's current ratio (a measure of liquidity) at the end of third-quarter 2024 was 0.88, lower than 1.01 in the year-ago quarter. A current ratio of less than 1 indicates that the company may have problems paying its short-term obligations.
Equifax’s Zacks Rank & Stocks to Consider
EFX carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are Braze (BRZE - Free Report) and DLocal Limited (DLO - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Braze has a long-term earnings growth expectation of 30%. BRZE delivered a trailing four-quarter earnings surprise of 132.9%, on average.
DLocal Limited has a long-term earnings growth expectation of 7.3%. DLO delivered a trailing four-quarter earnings surprise of 22.6%, on average.