Equifax (EFX) Q3 Earnings and Revenues Miss Estimates
Equifax Inc. EFX reported lower-than-expected third-quarter 2023 results.
Adjusted earnings (excluding 45 cents from non-recurring items) came in at $1.76 per share, missing the Zacks Consensus Estimate by 1.1% but increasing 1.7% from the year-ago figure.
Total revenues of $1.32 billion missed the consensus estimate by 0.7% and increased 6% from the year-ago figure on a reported basis and 6.5% on a local currency basis.
Equifax, Inc. Price, Consensus and EPS Surprise
Equifax, Inc. price-consensus-eps-surprise-chart | Equifax, Inc. Quote
Segmental Information
Revenues in the Workforce Solutions segment totaled $577.2 million, up 3% from the year-ago quarter’s figure but missed our estimated $602.2 million. Within the segment, Verification Services’ revenues of $459.3 million were up 1% year over year. Employer Services’ revenues of $117.9 million were up 13% year over year.
Revenues in the USIS segment were $426 million, which were up 7% from the year-ago quarter’s level and beat our estimate by 0.9%. Within the segment, Online Information Solutions’ revenues of $348.2 million were up 11% from the year-ago quarter’s figure. Mortgage Solutions’ revenues of $27.3 million declined 15% year over year. Financial Marketing Services’ revenues were $50.5 million, decreasing 1% year over year.
Revenues in the International division totaled $315.9 million, gaining 10% and 12% year over year on a reported basis and a local-currency basis, respectively. Revenues from the International segment beat our estimate by 5.3%. Asia Pacific revenues of $85.5 million declined 2% from the year-ago reported figure on a reported basis but were up 2% on a local-currency basis.
Revenues from Europe amounted to $85.2 million, down 6% year over year on a reported basis and 2% on a local-currency basis. Latin America revenues of $80.1 million grew 48% year over year on a reported basis and 62% on a local-currency basis. Canada revenues of $65.1 million were down 2% year over year on a reported basis and were flat on a local-currency basis.
Operating Results
Adjusted EBITDA in the third quarter of 2023 totaled $436.1 million, reflecting an 8% increase from the year-ago quarter’s level and beating our estimate by 1.1%. Adjusted EBITDA margin was 33.1%, which was up 60 basis points from the year-ago reported figure. The figure beat our estimated 29.1%.
Workforce Solutions’ adjusted EBITDA margin was 50.9% compared with 49.5% a year ago. Adjusted EBITDA margin for the USIS division was 34.2% compared with 34.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.2% compared with 26.8% in the prior-year quarter.
Balance Sheet & Cash Flow
EFX exited the third quarter with cash and cash equivalents of $412.6 million. Equifax generated $381.7 million in cash from operating activities in the quarter. The company has a long-term debt of $5.5 billion, which is the same as the quarter-ago reported figure. Capital expenditures were $134.3 million. The company distributed $48.1 million as dividend during the quarter.
Q4 and 2023 Outlook
For the fourth quarter of 2023, revenues are expected to be in the $1.31-$1.33 billion band. The Zacks Consensus Estimate for revenues is pegged at $1.33 billion. Adjusted earnings per share (EPS) are expected to be in the range of $1.72-$1.82 while the consensus estimate of EPS is $1.78, which is above the midpoint ($1.77).
For 2023, revenues are expected in the range of $5.25-$5.27 billion. The Zacks Consensus Estimate of $5.29 billion lies above the guided range. Adjusted EPS is expected to be in the range of $6.62-$6.72. The consensus mark for earnings is pegged at $6.90 per share, which lies above the guided range.
Equifax currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Here are a few stocks from the broader Business Services sector, which according to our model, have the right combination of elements to beat on earnings this season.
Verisk Analytics VRSK: The company’s revenues are expected to decline 11.1% from the year-ago figure while the bottom line is expected to match the prior-year figure. VRSK has beaten the Zacks Consensus Estimate in three of the previous four quarters and matched on one instance, with an average surprise of 9.9%. The company has an Earnings ESP of +5.23% and a Zacks Rank of 3. VRSK is expected to release its third-quarter earnings on Nov 1.
Aptiv APTV: The company’s revenues are expected to increase 7.1% from the year-ago figure and the bottom line is expected to indicate 8.6% decline from the prior-year figure. APTV has beaten the Zacks Consensus Estimate in all of the previous four quarters, with an average surprise of 13.4%. The company has an Earnings ESP of +5.69% and a Zacks Rank of 3. APTV is expected to release its third-quarter earnings on Nov 2.
Trane Technologies TT: The company’s revenues and bottom line are expected to indicate growth of 9.3% and 17.2%, respectively, from the year-ago figure. TT has beaten the Zacks Consensus Estimate in all previous four quarters, with an average surprise of 7.3%. The company has an Earnings ESP of +0.85% and a Zacks Rank of 2. TT is expected to release its third-quarter earnings on Nov 1.
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Equifax, Inc. (EFX) : Free Stock Analysis Report
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