A month has gone by since the last earnings report for IHS Markit (INFO). Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is IHS Markit due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
IHS Markit Surpassess Q4 Earnings Estimates
IHS Markit reported strong fourth-quarter fiscal 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 65 cents beat the consensus mark by 6.6% and increased 14% on a year-over-year basis. Total revenues came in at $1.12 billion, surpassing the consensus mark by 0.05% and improving 5% from the year-ago quarter.
Revenues at the Resources segment totaled $237.6 million, up 7% year over year, with recurring revenues rising 5% organically. The Transportation segment experienced year-over-year revenue growth of 9% to reach $324.5 million. Recurring revenues at this segment grew 12% organically.
Revenues at the CMS segment amounted to $127.7 million, down 8% year over year, with 1% organic growth in recurring revenues. Financial services segment’s revenues increased 5% year over year to $430.6 million, with 8% organic growth in recurring revenues.
Recurring fixed revenues of $810.1 million rose 6% year over year on a reported basis and 7% on an organic basis. Recurring variable revenues of $147.5 million grew 6% year over year on a reported basis and 7% on an organic basis. Non-recurring revenues totaled $162.8 million, down 2% year over year on a reported basis but up 1% on an organic basis.
Adjusted EBITDA of $452.9 million increased 8.6% from the year-ago quarter. Adjusted EBITDA margin improved 130 points (bps) year over year to 40.4%.
IHS Markit ended the quarter with cash and cash equivalent balance of $111.5 million compared with $124.1 million in the prior quarter. Long-term debt was $4.9 billion compared with $5.1 billion in the previous quarter.
Cash flow from operations and free cash flow amounted to $225.7 million and $147.5 million, respectively, in the quarter. CapEx was $78.2 million. The company repurchased $500 million of shares in fiscal 2019.
Fiscal 2020 Outlook
IHS Markit expects revenues of $4.52 billion to $4.59 billion, including organic growth of 5% to 6%. Adjusted EBITDA is expected in the range of $1.86 billion to $1.89 billion. Adjusted EPS of $2.82 to $2.88 is anticipated.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
At this time, IHS Markit has a great Growth Score of A, a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
IHS Markit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.