It has been about a month since the last earnings report for TransUnion (TRU - Free Report) . Shares have added about 3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
TransUnion Tops Q2 Earnings Estimates, Raises Guidance
TransUnion reported second-quarter 2017 adjusted earnings of 47 cents per share, beating the Zacks Consensus Estimate of 44 cents. Top-line growth, along with productivity improvement initiatives, drove the company’s profits.
The company generated GAAP net income of $64.9 million or 34 cents per share compared with $17.3 million or 9 cents per share in the year-ago period. Strong growth momentum across the USIS and International segments led to the impressive bottom-line performance.
Revenues for the quarter increased to $474.8 million compared with $425.7 million in the year-ago period and beat the Zacks Consensus Estimate of $463.5 million. Increase in revenues was driven by growth across the USIS and International segments.
USIS segment’s revenues came in at $298 million, up 16% year over year. Decision Services revenues increased 20% from the year-ago quarter to $61 million. Marketing Services revenues were $46 million, an increase of 23% from the prior-year quarter. Online Data Services revenues grew 13% year over year to $191 million.
International segment’s revenues rose 13% year over year to $87 million. On a constant currency basis, revenues grew an impressive 10%. Revenues from developed markets increased 11% (15% on a constant currency basis) to $31 million while that from emerging markets went up 13% (8% on a constant currency basis) to $56 million. Revenues at the Consumer Interactive segment came in at $105 million, down 1% year over year.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $186.1 million compared with $159.5 million in the prior-year quarter. Adjusted EBITDA margin was 39.2% compared with 37.5% in the year-ago quarter. The USIS segment’s adjusted operating income was $110 million, an increase of 26% from the prior-year quarter. The rise was driven by growth in the top line. The International segment’s adjusted operating income was $27 million, an increase of 12% (11% on a constant currency basis), driven by strong revenue growth. The Consumer Interactive segment’s adjusted operating was $51 million, an increase of 13% year over year.
Balance Sheet and Cash Flow
As of Jun 30, 2017, TransUnion had cash and cash equivalents of $142 million while long-term debt was $2,297.3 million. For the first six months of the year, cash flow from operating activities was $174.2 million compared with $149.50 million in the year-earlier period.
The company raised its full-year 2017 guidance. Consolidated revenues are currently expected to be in the range of $1.87 billion to $1.88 billion (a year-over-year increase of 8% to 9% on constant currency basis), up from $1.845 billion to $1.86 billion expected earlier). Adjusted earnings per share are expected to be between $1.79 and $1.82 compared with earlier projections of $1.74–$1.79. For the third quarter of 2017, consolidated revenues are expected to be in the range of $470−$475 million. Adjusted EBITDA is expected to be between $185 million and $189 million. Adjusted earnings per share are expected to be between 45 cents and 46 cents.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, TransUnion's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
The company's stock is suitable solely for growth based on our styles scores.
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.