A month has gone by since the last earnings report for TransUnion (TRU). Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TransUnion due for a breakout? 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.
TransUnion's Q1 Earnings and Revenues Beat Estimates
TransUnion delivered better-than-expected first-quarter 2019 results.
Adjusted EPS of 60 cents outpaced the consensus mark by a penny and improved 5.3% year over year. Total revenues came in at $619 million, which beat the consensus mark by $2 million. Revenues increased 15% on a reported basis, 17% on a constant currency basis and6% at organic constant currency. This uptick was driven by strong performance across all of the company’s operating segments — U.S. Information Services (USIS), International and Consumer Interactive.
Adjusted revenues (excluding the impact of deferred revenue purchase, accounting reductions and other adjustments to revenues for the company’s recently acquired entities) came in at $623 million, up 16% year over year on a reported basis, 18% at constant currency and 6% at organic constant currency. Acquisitions of iovation, HPS, Rubixis and Callcredit drove adjusted revenues.
Operating Segments’ Revenues
The U.S. Information Services (USIS) revenues of $369 million increased 8% year over year on a reported basis and 3% on an organic basis. USIS adjusted revenues amounted to $369 million.
Within the segment, Financial Services revenues of $189 million increased 4% and 1%, respectively, on a reported and organic basis. Emerging Verticals revenues including Healthcare, Insurance and all other verticals, were $180 million, up 13% year over year on a reported basis and 4% on an organic basis.
International revenues surged 52% year over year on a reported and 61% on a constant-currency basis to $146 million. Canada, Latin America, India, Africaand Asia Pacific revenues increased year over yearon a constant currency basis.
Revenues at the Consumer Interactive segment improved 5% from the prior-year quarter number to $131 million.
Adjusted EBITDA was $239 million, up 18% year over year on a reported and 20% at constant currency. Adjusted EBITDA margin of 38.3% expanded 60 basis points (bps) year over year.
Balance Sheet and Cash Flow
TransUnion had $200.9 million in cash and cash equivalents at the end of the first quarter compared with $187.4 million at the end of the prior quarter. Long-term debt was $4 billion, roughly flat with the prior-quarter tally. The company generated $123.8 million in cash from operating activities and spent $41.9 million on capex.
The company paid $14.4 million in dividends in the quarter.
For the second quarter of 2019, TransUnion expects adjusted revenues between $642 million and $647 million, reflecting an improvement of 14-15% year over year. Adjusted EBITDA is anticipated in the range of $253-$257 million, mirroring an increase of 15-17%. Adjusted EPS is expected between 64 cents and 66 cents, indicating a rise of 3-5% year over year.
TransUnion expects adjusted revenues between $2.60 billion and $2.62 billion, reflecting year-over-year increase of 11-12%. Adjusted EBITDA is anticipated in the range of $1.025-$1.037 million, mirroring year-over-year increase of 12-13%. Adjusted EPS is anticipated in the band of $2.60-$2.65, indicating improvement of 4-6%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, TransUnion has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
TransUnion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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