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Here's Why You Should Retain Equifax (EFX) in Your Portfolio

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Zacks Equity Research
·3 min read
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Equifax Inc.’s EFX shares have charted a solid trajectory in recent times, appreciating a massive 66.5% over the past year, ahead of the industry’s gain of 58.2%.

The company has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth.

Equifax has an expected long-term earnings per share (three to five years) growth rate of 13.1%. Its revenues are expected to increase 7.8% in 2021 and 6% in 2022, year over year.

Factors That Auger Well

Equifax is benefiting from a solid product portfolio and clear understanding of the sectors it serves. Customers find considerable significance in the company’s offerings as they use the credit information and related analytical services and data to process applications for new credit cards, automobile loans, home and equity loans, and other consumer loans.

We believe synergies from acquisitions, in addition to continued general consumer credit activity, product innovation, initiatives to foster enterprise growth, and efficient business executions, will continue to boost Equifax’s revenues over the long run. Revenues have shown decent growth rates in the past few years, having grown at a CAGR of 5.6% from 2016 to 2020. The top line improved 23.5% year over year in the fourth quarter of 2020.

Debt Woes Stay

Equifax’s total debt at the end of fourth-quarter 2020 was $3.28 billion, flat sequentially. The company’s cash and cash equivalent of $1.68 billion at the end of the quarter was well below this debt level, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $1.1 billion.

Zacks Rank and Stocks to Consider

WEX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are The Interpublic Group of Companies IPG, Cross Country Healthcare CCRN and Charles River Associates CRAI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Interpublic, Cross Country Healthcare and Charles River is pegged at 2.4%, 12% and 13%, respectively.

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Equifax, Inc. (EFX) : Free Stock Analysis Report

Charles River Associates (CRAI) : Free Stock Analysis Report

Interpublic Group of Companies, Inc. The (IPG) : Free Stock Analysis Report

Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report

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Zacks Investment Research