A month has gone by since the last earnings report for Equifax (EFX). Shares have added about 12.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Equifax 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 catalysts.
Equifax Tops Q1 Earnings and Revenue Estimates
Equifax reported solid first-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of $1.40 per share beat the consensus mark by 8.5% and improved 16% on a year-over-year basis. The reported figure exceeded the guided range of $1.29-$1.34.
Revenues of $957.9 million outpaced the consensus estimate by 4.2% and improved 13% year over year on a reported basis and 15% on a local currency basis. The reported figure exceeded the guided range of $915-$930 million.
Revenues in the USIS division came in at $343.2 million, up 15% from the year-ago quarter. Within the division, Online Information Solutions revenues of $252.8 million were up 16% year over year. Mortgage Solutions revenues of $42.8 million improved 33% year over year. Financial Marketing Services revenues came in at $47.6 million, down 2% year over year. The segment contributed 36% to total revenues.
Revenues in the International division totaled $216 million, down 4% year over year on a reported basis but up 3% on a local currency basis. Asia Pacific revenues of $69.7 million declined 5% year over year on a reported basis but grew 3% on a local currency basis. Revenues from Europe came in at $66.4 million, which decreased 3% year over year on a reported basis and 1% on a local currency basis. Latin America revenues of $43.2 million declined 8% year over year on a reported basis but grew 9% on a local currency basis. Canada revenues of $36.7 million rose 1% year over year on a reported basis and 2% on a local currency basis. The International segment contributed 23% to total revenues.
Revenues in the Workforce Solutions segment totaled $301.6 million, up 32% from the year-ago quarter’s figure. Within the segment, Verification Services revenues of $220.2 million were up 48% year over year. Employer Services revenues of $81.4 million were up 2% year over year. Workforce Solutions contributed 31% to total revenues.
Revenues in the Global Consumer Solutions segment amounted to $97.1 million, up 3% year over year on a reported basis and local currency basis. The segment contributed 10% to total revenues.
Adjusted EBITDA margin in the first quarter of 2020 rose to 32.4% from 30.5% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 44.7% compared with 42.9% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 27.8% compared with 25.3% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 51.5% compared with 49.4% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 23.1% compared with 23.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited first-quarter 2020 with cash and cash equivalents of $369.9 million compared with $401.3 million at the end of the prior quarter. Long-term debt was $3.51 billion compared with $3.38 billion at the end of the prior quarter.
The company generated $30.8 million of cash from operating activities and capex was $88 million. Also, Equifax paid out dividend of $47.3 million to shareholders in the reported quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -33.41% due to these changes.
At this time, Equifax has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equifax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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