Dun & Bradstreet (DNB) Down 7.1% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Dun & Bradstreet Corporation DNB. Shares have lost about 7.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.
Dun & Bradstreet Q1 Earnings & Revenues Top Estimates
The Dun & Bradstreet Corporation reported first-quarter 2017 results wherein adjusted earnings of $0.95 per share and revenues of $381.5 million easily beat the Zacks Consensus Estimate of $0.89 and $378.4 million, respectively.
On a year-over-year basis, adjusted earnings fell 19.5% but revenues grew 1.7%.
Quarter Details
On an adjusted basis and after including forex effect, total revenue came in at $383.8 million, up 2% year over year. Adjusted deferred revenues were up 1% after including forex effect.
Organic revenues came in at $370.7 million, almost flat year over year.
Region wise, adjusted revenues from the company’s Americas segment were up 2% year over year to $316.3 million whereas that from Non-Americas declined 1% to $67.5 million.
Segment wise, on an adjusted basis and after including forex effect, Risk Management Solutions revenues from Americas were up 1% year over year to $182 million. Sales & Marketing Solutions revenues from the region grew 4% from the year-ago quarter to $134.3 million.
In Non-Americas, adjusted Risk Management Solutions revenues declined 4% year over year to $54.4 million. Sales & Marketing Solutions Non-Americas grew 15% from the year-ago quarter to $13.1 million.
Margins
On an adjusted basis, total operating costs were down 4% to $316.6 million. Adjusted total operating income was $67.2 million, down 9% year over year.
Balance Sheet & Cash Flow
Dun & Bradstreet ended the quarter with $375.4 million in cash and cash equivalents and long-term debt of $1.685 billion. The company’s net debt position as of Mar 31, 2017 was $1.332 billion.
For the quarter, cash flow from operating activities was $123.8 million while free cash flow was $108.3 million, down 6% year over year.
Outlook
For 2017, management expects adjusted earnings per share to be down in the range of 4% to 9%. Revenues are expected to increase in the band of 3% to 5% (before forex effect).
Organic revenues are likely to increase in the band of 1% to 3% (before forex effect). Adjusted operating income is projected to be in the range of negative 2% to positive 2%.
Free cash flow will be in a bracket of $215 million to $245 million (excluding any regulatory fines impact from China operations).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.
Dun & Bradstreet Corporation Price and Consensus
Dun & Bradstreet Corporation (The) Price and Consensus | Dun & Bradstreet Corporation (The) Quote
VGM Scores
At this time, the stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Following the exact same course, the stock was allocated also a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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