IHS Markit's (INFO) Q1 Earnings Beat Estimates, Improve Y/Y

IHS Markit Ltd. INFO 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, marginally missing the consensus mark but improving 3% from the year-ago quarter.

We observe that shares of IHS Markit have decreased 16.3% over the past year compared with 14.1% decline of the industry it belongs to.

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.

Zacks Rank and Stocks to Consider

Currently, IHS Markit has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Sykes Enterprises SYKE, Omnicom OMC and Genpact G, each carrying a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rate for Sykes, Omnicom and Genpact is 10%, 5.6% and 14%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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