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A month has gone by since the last earnings report for IHS Markit (INFO). Shares have added about 1.9% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
IHS Markit Surpasses Q1 Earnings & Revenue Estimates
IHS Markit reported impressive first-quarter fiscal 2021 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 71 cents beat the consensus mark by 1.4% and increased 7.6% on a year-over-year basis. Total revenues came in at $1.12 billion, surpassing the consensus mark by 1% and increasing 3.6% from the year-ago quarter on a reported basis and 3% organically.
Financial services segment’s revenues increased 11% year over year on a reported basis, and 10% on an organic basis, to $485 million. Revenues at the Resources segment totaled $203 million, down 10% year over year on a reported basis as well as organically.
The Transportation segment witnessed year-over-year revenue growth of 5% on a reported basis to reach $312 million. Revenues increased 4% organically. Revenues at the Consolidated Markets & Solutions segment amounted to $121 million, down 1% year over year on a reported basis as well as organically.
Recurring fixed revenues of $825.6 million were up 3% year over year on a reported basis and 2% organically. Recurring variable revenues of $172.9 million grew 18% year over year on a reported and 17% on an organic basis. Non-recurring revenues totaled $121.4 million, down 7% year over year on a reported as well as an organic basis.
Adjusted EBITDA of $466.8 million was up 8% from the year-ago quarter. Adjusted EBITDA margin improved 180 basis points (bps) year over year to 41.7%.
IHS Markit ended the quarter with cash and cash equivalent balance of $172 million, compared with $125.6 million in the prior quarter. Long-term debt was $4.6 billion, flat with the previous quarter’s figure.
Cash flow from operations and free cash flow amounted to $244.5 million and $171.9 million, respectively, in the quarter. CapEx was $72.6 million. The company paid out $79.3 million in dividends in the quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
Currently, IHS Markit has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth 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 upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise IHS Markit has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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