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Equifax (EFX) Surpasses Q4 Earnings & Revenue Estimates

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Zacks Equity Research
·6 min read
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Equifax Inc. EFX reported better-than-expected fourth-quarter 2020 results.

Adjusted earnings of $2 per share beat the Zacks Consensus Estimate by 9.3% and improved 30.7% on a year-over-year basis. The reported figure exceeded the guided range of $1.40-$1.50.

Revenues of $1.12 billion outpaced the consensus estimate by 3% and improved 23.5% year over year on a reported basis as well as on a local-currency basis. The reported figure lies within the guided range of $990 million -$1.41 billion.

Over the past year, shares of Equifax have gained 19.4% against 3.1% decline of the industry it belongs to. The Zacks S&P 500 composite has risen 18.6% in the said time frame.

Let’s check out the numbers in detail.

Segmental Revenues

Revenues in the U.S. Information Solutions division came in at $387.5 million, up 17% from the year-ago quarter. Within the division, Online Information Solutions’ revenues of $267.5 million were up 18% year over year. Mortgage Solutions’ revenues of $50.4 million improved 55% year over year. Financial Marketing Services’ revenues came in at $69.6 million, down 2% year over year. The segment contributed 35% of total revenues.

Revenues in the International division totaled $247.5 million, up 5% year over year on a reported and 3% on a local-currency basis. Asia Pacific revenues of $81.4 million grew 10% year over year on a reported basis and 4% on a local-currency basis. Revenues from Europe came in at $82.5 million, up 8% year over year on a reported basis and 4% on a local-currency basis. Latin America revenues of $42.5 million declined 8% year over year on a reported basis and 1% on a local-currency basis. Canada revenues of $41.1 million improved 4% year over year on a reported basis and 3% on a local-currency basis. International division contributed 22% to total revenues.

Revenues in the Workforce Solutions segment totaled $406.5 million, up 62% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $330 million were up 70% year over year. Employer Services revenues of $76.5 million were up 35% year over year. Workforce Solutions contributed 36% to total revenues.

Revenues in the Global Consumer Solutions segment amounted to $77 million, down 13% year over year on both reported and local-currency basis. The segment contributed 7% to total revenues.

Operating Results

Adjusted EBITDA in the fourth quarter of 2020 came in at $422.4 million compared with $322.7 million in the year-ago quarter. Adjusted EBITDA margin rose to 37.8% from 35.6% in the year-ago quarter.

Adjusted EBITDA margin for USIS was 43.5% compared with 45.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 34% compared with 36.4% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 56.2% compared with 47% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 20.8% compared with 26.9% in the year-ago quarter.

Equifax, Inc. Price, Consensus and EPS Surprise

Equifax, Inc. Price, Consensus and EPS Surprise
Equifax, Inc. Price, Consensus and EPS Surprise

Equifax, Inc. price-consensus-eps-surprise-chart | Equifax, Inc. Quote

Balance Sheet and Cash Flow

Equifax exited fourth-quarter 2020 with cash and cash equivalents of $1.68 billion compared with $1.54 billion at the end of the prior quarter. Long-term debt was $3.28 billion, flat sequentially.

The company generated $297.2 million of cash from operating activities and capex was $111.8 million. Also, Equifax paid out dividends of $47.4 million to shareholders in the reported quarter.

First-Quarter and Full-Year 2021 Guidance

For the first quarter of 2021, Equifax expects revenues between $1.11 and $1.13 billion, indicating year-over-year growth of 15.3-17.4%. This includes 1.9% positive foreign exchange impact. The Zacks Consensus Estimate of $1.09 billion lies below the guidance.

Adjusted EPS is anticipated in the range of $1.45-$1.55. The Zacks Consensus Estimate of $1.52 lies within the guidance.

For full-year 2021, revenues are expected between $4.35 and $4.45 billion, reflecting year-over-year local currency growth of 5.4-7.8%. This includes 1.5% positive foreign exchange impact. The Zacks Consensus Estimate of $4.37 billion lies within the guidance.

Adjusted EPS is anticipated in the range of $6.20-$6.50. The Zacks Consensus Estimate of $6.49 lies within the guidance.

Currently, Equifax carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

RollinsROL fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and improved 6% year over year.

IHS Markit’s INFO fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter on a reported basis.

Automatic Data Processing’s ADP second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year.

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