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Will Equifax (EFX) Keep its Earnings Streak Alive in Q4?

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Equifax Inc. (EFX - Free Report) is set to release fourth-quarter 2016 earnings on Feb 8. In the last quarter, the company reported a positive earnings surprise of 5.88%. We note that the company delivered positive earnings surprises in the last four quarters, with an average surprise of 4.94%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Equifax is a leading information services provider to consumers and businesses. The company's products and services help customers make better credit and marketing decisions via its database of consumer and business information derived from numerous types of credit, financial, public record, and demographic data.

In September last year, 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 in the to-be-reported quarter.

Management’s efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America should aid results of the fourth quarter. 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, we expect the company’s investments in new initiatives to weigh on its upcoming quarterly earnings. Additionally, uncertainty surrounding IT spending and strengthening U.S. dollar are some concerns. Moreover, increasing competition from the likes of Automatic Data Processing, Insperity and TriNet Group are the other factors likely to affect earnings this time around.

Notably, shares of Equifax have underperformed the Zacks categorized Financial Transaction Services industry in the last three months. While the stock lost 4.5% of its value in the said period, the industry gained 3.7%.

Earnings Whispers

Our proven model does not conclusively show that Equifax is likely to beat the Zacks Consensus Estimate in its upcoming release. 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. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Equifax is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.38 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Equifax has a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Equifax, Inc. Price and EPS Surprise

Equifax, Inc. Price and EPS Surprise | Equifax, Inc. Quote

Stocks to Consider

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

Pandora Media, Inc. , with an Earnings ESP of +10.81% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Twilio Inc. (TWLO - Free Report) , with an Earnings ESP of +8.33% and a Zacks Rank #3.

CenturyLink, Inc. (CTL - Free Report) , with an Earnings ESP of +1.79% and a Zacks Rank #3.

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