Shares of TransUnion TRU have gained 25.5% over the past six months, significantly outperforming the 6.1% rally of the industry it belongs to.
We believe that the company, with a market capitalization of $16.6 billion and long-term (three to five years) expected EPS growth rate of 14%, has the potential to continue performing well and should be on investors’ buy list.
Here’s why the stock is currently a good pick.
Solid Rank: TransUnion has 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: Four estimates for 2020 moved north over the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2020 climbed 1.8%.
Earnings Surprise History: TransUnion has an impressive earnings surprise history. The company outpaced the consensus mark in the last four quarters, delivering an earnings surprise of 13.7%, on average.
Earnings Growth Prospects
The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.9, indicating year-over-year growth of 3.9%. Earnings are expected to grow 12.7% in 2021.
TransUnion is benefiting from the Big Data and analytics market, which is expanding at a rapid pace as companies comprehend the advantages of building an analytical enterprise where decisions are derived from data and insights. The company’s business model ensures highly recurring and diversified revenue streams.
In response to the COVID-19 pandemic, the company continues to follow the work-from-home model and is trying to be disciplined in managing investment priorities and cost structure.
The recently announced acquisition of Tru Optik is expected to enhance TransUnion’s collective data sets, analytic capabilities and market connectivity, helping it serve its expanded customer base with in-depth customer intelligence, thereby increasing reach, accuracy and transparency of identity and audience-development products.
The recently completed acquisition of Signal is expected to bolster the company’s marketing abilities through people-based identity-enabled marketing solutions.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Equifax (EFX), Republic Services (RSG) and ICF International (ICFI), each carrying a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for Equifax, Republic Services and ICF International is 6.7%, 7.9% and 10%, respectively.
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