TransUnion(TRU - Free Report) has performed well over the past year and has the potential to sustain the momentum in the near term. Consequently, if you have not taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes It an Attractive Pick?
An Outperformer: Shares of TransUnion have returned 10.7% in a year’s time, against the 0.3% decline of the industry it belongs to.
Solid Zacks Rank:TransUnion currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer attractive investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions:The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for first-quarter 2020 earnings has increased 1.5% over the past 60 days. Earnings estimates for 2020 and 2021 have moved up 1.9% and 0.3%, respectively, over the same time period.
Positive Earnings Surprise History:TransUnion has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the positive surprise being 5.1%, on average.
Strong Growth Prospects:The Zacks Consensus Estimate for first-quarter 2020 earnings is pegged at 70 cents, indicating year-over-year growth of 16.7%. Moreover, earnings are expected to register 13.9% growth in 2020 and 12.8% in 2021. The stock has a long-term expected EPS (three to five years) growth rate of 12.9%.
Growth Factors:TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flows. It serves a broad range of customers across multiple geographies and verticals.
The company’s gigantic treasure trove of data is its most distinguishing asset and also perhaps the biggest barrier to entry for competitors. TransUnion has over 65 petabytes of data, growing at an average of over 25% annually, since 2010. Acquiring or building such data involves huge costs, making it extremely difficult for a new company to build the contacts and data that TransUnion already has. This fortifies the company's ability to sustain its competitive advantage and protect market share.
The company’s successful acquisition strategy has played an important role in its growth over the last five to six years. The strategy focuses on investment in unique and differentiated data assets, acquiring new capabilities for expanding in vertical markets and expanding international footprints. In 2019, the company completed acquisition of TruSignal, a people-based marketing technology company. This should strengthen TransUnion’s digital marketing solutions. In 2018, TransUnion acquired Rubixis, Callcredit, iovation and Healthcare Payment Specialists. These buyouts are helping the company with new market entry and portfolio diversification. They are contributing significantly to the company’s top-line growth.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Interpublic (IPG - Free Report) , Omnicom (OMC - Free Report) and Genpact (G - Free Report) , each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Interpublic, Omnicom and Genpact is 4.5%, 5.6% and 11.9%, respectively.
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