TransUnion (NYSE:TRU) just released its latest second-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 8.2% to hit US$634m. TransUnion also reported a statutory profit of US$0.36, which was an impressive 45% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, TransUnion's 17 analysts are forecasting 2020 revenues to be US$2.66b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 4.0% to US$1.59 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.58b and earnings per share (EPS) of US$1.31 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$96.78, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on TransUnion, with the most bullish analyst valuing it at US$110 and the most bearish at US$75.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.3%, a significant reduction from annual growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.4% next year. It's pretty clear that TransUnion's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TransUnion following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for TransUnion going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with TransUnion .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.