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IHS Markit (INFO) Up 11.8% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for IHS Markit (INFO). Shares have added about 11.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is IHS Markit due for a pullback? 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.

IHS Markit Tops Q1 Earnings Beat Estimates, Revenues Lag

IHS Markit reported mixed first-quarter fiscal 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings per share of 66 cents beat the consensus mark by 4.8% and increased 10% on a year-over-year basis. Total revenues came in at $1.08 billion, marginallymissing the consensus mark butimproving 3% from the year-ago quarter.

Quarterly Details

Revenues at the Resources segment totaled $226 million, up 4% year over year, with 1% organic growth. The Transportation segment experienced year-over-year revenue growth of 3% to reach $297 million and included organic growth of 9%.

Revenues at the CMS segment amounted to $122 million, down 8% year over year, with 3% organic growth. Financial services segment’s revenues increased 7% year over year to $436 million, with 7% organic growth.

Recurring fixed revenues of $8.4 million rose 5% year over year on a reported basis and 7% on an organic basis. Recurring variable revenues of $147 million grew 8% year over year on a reported as well as organic basis. Non-recurring revenues totaled $130 million, down 9% year over year on a reported basis and 5% on an organic basis.

Adjusted EBITDA of $431.6 million increased 5.8% from the year-ago quarter. Adjusted EBITDA margin improved 90 points (bps) year over year to 39.9%.

IHS Markit ended the quarter with cash and cash equivalent balance of $143.9 million compared with $111.5 million in the prior quarter. Long-term debt was $5 billion compared with $4.9 billion in the previous quarter.

Cash flow from operations and free cash flow amounted to $119.5 million and $117.4 million, respectively, in the quarter. CapEx was $78 million. The company repurchased $500 million of shares in fiscal 2019.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, IHS Markit has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

IHS Markit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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