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Equifax's (EFX) Q1 Earnings Beat Estimates, Revenues Lag
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Equifax Inc. (EFX - Free Report) reported mixed first-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings of $1.20 per share beat the consensus mark by a penny but declined 16% on a year-over-year basis. Earnings came in at the higher end of the guided range of $1.15-$1.20. Costs associated with the cybersecurity incident weighed on the bottom line.
Revenues totaled $846.1 million, which lagged the Zacks Consensus Estimate by roughly $2 million. Revenues fell 2% year over year on a reported basis but increased 1% on a local currency basis. Revenues came below the midpoint of the guided range of $840-$855 million. Weakness in the USIS, International and Global Consumer Solutions segments resulted in the year-over-year downside. This was partially offset by strength in the Workforce Solutions segment.
The stock has gained 27.8% year to date, outperforming the 25.3% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues in the USIS division came in at $298.3 million, down 3% from the year-ago quarter’s number. Within the division, Online Information Solutions revenues of $217.7 million were down 1% year over year. Mortgage Solutions revenues of $32.2 million declined 23% year over year. Financial Marketing Services revenues came in at $48.4 million, up 6% year over year. The segment contributed 35% to total revenues.
Revenues in the International division totaled $225.1 million, down 8% year over year on a reported basis but up 2% on a local currency basis. Equifax reported year-over-year revenue decline of 11%, 16% and 3% in Asia Pacific, Latin America and Europe, respectively. On a local currency basis, revenues from Asia Pacific declined 3%, while that from Europe and Latin America grew 4% and 5%, respectively. Canada revenues rose 2% year over year on a reported basis and 8% on a local currency basis. The International segment contributed 27% to total revenues.
Revenues in the Workforce Solutions segment totaled at $228.5 million, up 8% from the year-ago quarter’s figure. Within the segment, Verification Services revenues of $148.9 million were up 16% year over year. Employer Services revenues of $79.6 million were down 4% year over year. Workforce Solutions contributed 27% to total revenues.
Revenues in the Global Consumer Solutions segment amounted to $94.2 million, down 9% year over year on a reported basis and 8% on a local currency basis. The segment contributed 11% to total revenues.
Adjusted EBITDA in the first quarter fell 11% year over year to $258.2 million. Adjusted EBITDA margin was 30.5% compared with 33.5% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 42.9% compared with 44.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 25.3% compared with 29.4% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 49.4% compared with 48.9% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 23.9% compared with 33.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited the first quarter with cash and cash equivalents of $133.2 million, lower than $223.6 million in the prior quarter. Long-term debt at the end of the quarter was $2.7 billion, higher than $2.6 billion in the previous quarter. The company generated $31 million of cash from operating activities and capex was $114.8 million. Also, Equifax paid dividend of $47.1 million to shareholders in the quarter.
Guidance
For the second quarter of 2019, Equifax expects revenues in the range of $865-$880 million, indicating year-over-year local currency growth of 0.5-2.5%. The guided range is much below the Zacks Consensus Estimate of $887.8 million. Adjusted EPS is anticipated to be between $1.32 and $1.37, far below the Zacks Consensus Estimate of $1.50.
For 2019, revenues are expected between $3.425 billion and $3.525 billion, the midpoint ($3.475 billion) of which is below the Zacks Consensus Estimate of $3.490 billion. Adjusted EPS is anticipated to be between $5.60 and $5.80, the midpoint ($5.70) of which is above the Zacks Consensus Estimate of $5.66.
Long-term expected EPS (three to five years) growth rate for WEX, Automatic Data Processing and FLEETCOR is 15%, 13% and 16.5%, respectively.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
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Equifax's (EFX) Q1 Earnings Beat Estimates, Revenues Lag
Equifax Inc. (EFX - Free Report) reported mixed first-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings of $1.20 per share beat the consensus mark by a penny but declined 16% on a year-over-year basis. Earnings came in at the higher end of the guided range of $1.15-$1.20. Costs associated with the cybersecurity incident weighed on the bottom line.
Revenues totaled $846.1 million, which lagged the Zacks Consensus Estimate by roughly $2 million. Revenues fell 2% year over year on a reported basis but increased 1% on a local currency basis. Revenues came below the midpoint of the guided range of $840-$855 million. Weakness in the USIS, International and Global Consumer Solutions segments resulted in the year-over-year downside. This was partially offset by strength in the Workforce Solutions segment.
The stock has gained 27.8% year to date, outperforming the 25.3% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues in the USIS division came in at $298.3 million, down 3% from the year-ago quarter’s number. Within the division, Online Information Solutions revenues of $217.7 million were down 1% year over year. Mortgage Solutions revenues of $32.2 million declined 23% year over year. Financial Marketing Services revenues came in at $48.4 million, up 6% year over year. The segment contributed 35% to total revenues.
Revenues in the International division totaled $225.1 million, down 8% year over year on a reported basis but up 2% on a local currency basis. Equifax reported year-over-year revenue decline of 11%, 16% and 3% in Asia Pacific, Latin America and Europe, respectively. On a local currency basis, revenues from Asia Pacific declined 3%, while that from Europe and Latin America grew 4% and 5%, respectively. Canada revenues rose 2% year over year on a reported basis and 8% on a local currency basis. The International segment contributed 27% to total revenues.
Revenues in the Workforce Solutions segment totaled at $228.5 million, up 8% from the year-ago quarter’s figure. Within the segment, Verification Services revenues of $148.9 million were up 16% year over year. Employer Services revenues of $79.6 million were down 4% year over year. Workforce Solutions contributed 27% to total revenues.
Revenues in the Global Consumer Solutions segment amounted to $94.2 million, down 9% year over year on a reported basis and 8% on a local currency basis. The segment contributed 11% to total revenues.
Equifax, Inc. Revenue (TTM)
Equifax, Inc. revenue-ttm | Equifax, Inc. Quote
Operating Results
Adjusted EBITDA in the first quarter fell 11% year over year to $258.2 million. Adjusted EBITDA margin was 30.5% compared with 33.5% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 42.9% compared with 44.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 25.3% compared with 29.4% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 49.4% compared with 48.9% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 23.9% compared with 33.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited the first quarter with cash and cash equivalents of $133.2 million, lower than $223.6 million in the prior quarter. Long-term debt at the end of the quarter was $2.7 billion, higher than $2.6 billion in the previous quarter. The company generated $31 million of cash from operating activities and capex was $114.8 million. Also, Equifax paid dividend of $47.1 million to shareholders in the quarter.
Guidance
For the second quarter of 2019, Equifax expects revenues in the range of $865-$880 million, indicating year-over-year local currency growth of 0.5-2.5%. The guided range is much below the Zacks Consensus Estimate of $887.8 million. Adjusted EPS is anticipated to be between $1.32 and $1.37, far below the Zacks Consensus Estimate of $1.50.
For 2019, revenues are expected between $3.425 billion and $3.525 billion, the midpoint ($3.475 billion) of which is below the Zacks Consensus Estimate of $3.490 billion. Adjusted EPS is anticipated to be between $5.60 and $5.80, the midpoint ($5.70) of which is above the Zacks Consensus Estimate of $5.66.
Zacks Rank & Stocks to Consider
Equifax currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Business Services sector are WEX (WEX - Free Report) , Automatic Data Processing (ADP - Free Report) and FLEETCOR . While WEX sports a Zacks Rank #1 (Strong Buy), Automatic Data Processing and FLEETCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected EPS (three to five years) growth rate for WEX, Automatic Data Processing and FLEETCOR is 15%, 13% and 16.5%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>