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DNB to Face Credit Rating Charges

Zacks Equity Research

Recently, a federal district court said that Dun & Bradstreet Corp. (DNB) ought to face charges for adopting aggressive sales tactics as per a lawsuit filed by a small Seattle-based construction firm, O&R Construction. We note that the Western District of Washington court had denied DNB’s plea to dismiss the lawsuit earlier this month.

As per the lawsuit filed by O&R, DNB had filed a bad credit report stating that the company was slow in repaying debt and hence may end up as a defaulter. This report, in turn led the Home Depot (HD) to lower its credit line by $8000.

As per the senior executives of O&R Construction, the company had to cough up a significant sum of $1000 per month to Dun & Bradstreet Credibility Corp. in order to revive its credit profile.

Dun & Bradstreet Corp. was spun off from DNB sometime in 2010. Dun & B Credibility Corp. provides businesses with credit management services and tools. DNB, however, has denied its involvement in the aforesaid case and called D&B Credibility a separate legal entity.

DNB Corp. is a provider of business information. Their information and technology solutions help businesses reduce credit risk, find profitable customers, manage customer and vendor relationships more efficiently and collect cash and receivables.

DNB’s high-margin business model, strong international growth potential, emerging market growth opportunities, strategic investments, incremental cost savings and new product pipeline will drive growth over the long term.

However, it is believed that increasing competition from companies including Equifax Inc. (EFX), Yahoo! (YHOO) and Moody’s Corp (MCO) will hurt profitability going forward.

Currently, DNB has a Zacks Rank # 3 (Hold).

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