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TransUnion (TRU) Up 3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for TransUnion (TRU - Free Report) . Shares have added about 3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TransUnion 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 catalysts.

TransUnion Q3 Earnings & Revenues Surpass Estimates

TransUnion reported solid third-quarter 2019 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of 76 cents per share outpaced the consensus mark by 5 cents and improved 16.9% year over year.

Total revenues of $689.3 million beat the consensus mark by $12.5 million and increased 14% year over year on a reported basis, 15% on a constant-currency basis and 15% on an organic constant-currency basis.

Adjusted revenues (excluding the impact of deferred revenue purchase accounting reductions and other adjustments to revenues for the company’s recently acquired entities) came in at $689 million, up 11% year over year on a reported basis, 12% at constant currency and 11% at organic constant currency.

Revenue Growth Across All Segments

The U.S. Markets revenues of $420 million increased 12% year over year on a reported basis and 11% on an organic basis. Within the segment, Financial Services revenues of $225 million increased 13% year over year on a reported and organic basis. Emerging Verticals revenues, including Healthcare, Insurance and all other verticals, were $195 million, up 11% year over year on a reported basis and 8% on an organic basis.

International revenues rose 24% year over year on a reported basis and 28% at constant-currency basis to $160 million. Adjusted revenues also came in at $160 million, up 10% year over year on a reported basis and 14% at constant-currency basis. Revenues from Canada, Latin America, United Kingdom, Africa, India and Asia Pacific increased year over year on a reported as well as constant-currency basis.

Revenues at the Consumer Interactive segment improved 7% from the prior-year quarter number to $128 million.

Margin Expanded

Adjusted EBITDA was $281 million, up 15% year over year on a reported basis, 16% on a constant-currency basis and 15% on an organic constant-currency basis. Adjusted EBITDA margin came in at 40.7% compared with 39.4% in the prior-year quarter.

Balance Sheet and Cash Flow

TransUnion had $235.9 million in cash and cash equivalents at the end of third-quarter 2019 compared with $194.7 million at the end of the prior quarter. Long-term debt was $3.65 billion, compared with $3.83 billion in the prior quarter. The company generated $279.4 million in cash from operating activities and CapEx was $44.1 million. The company paid out $14.1 million in dividends in the quarter.

Q4 Outlook

For the fourth quarter of 2019, TransUnion expects adjusted revenues between $667 million and $672 million, suggesting an improvement of 7-8% year over year.

Adjusted EPS is expected between 69 cents and 71 cents, indicating a rise of 5-7% year over year. The Zacks Consensus Estimate of 71 cents came in line with the higher end of the guided range.

Adjusted EBITDA is anticipated in the range of $264-$268 million, suggesting an increase of 6-8%.

2019 View

TransUnion raised its 2019 guidance. The company now expects adjusted revenues between $2.644 billion and $2.649 billion, indicating year-over-year increase of 13%. The previous guidance was between $2.628 billion and $2.638 billion.

Adjusted EPS is anticipated in the band of $2.74-$2.76, suggesting improvement of 10%. The previous expectation was in the band of $2.66-$2.69.

Adjusted EBITDA is expected in the range of $1.048-$1.052 million, indicating year-over-year increase of 14-15%. The previously anticipated range was $1.036-$1.044 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, TransUnion has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TransUnion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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