For Immediate Release
Chicago, IL – June 14, 2021 – Today, Zacks Equity Research discusses Business Information including Nielsen Holdings plc NLSN, TransUnion TRU and S&P Global Inc. SPGI.
Increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to cater to the pandemic-driven rising demand for services that ensure risk mitigation, cost reduction and productivity improvement.
Rising technology adoption is benefiting companies like Nielsen, TransUnion and S&P Global, enabling them to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a wide range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment characterized by evolving customer behavior, preference and demographics.
Key drivers of the industry are utilization of information services for risk management, delivery of customer-centric solutions and automation in gathering information. Key challenges currently include risk of data misappropriation, theft, and cybersecurity. Prominent industry players include information-measurement giant Nielsen, ratings, benchmarks, analytics, and data provider S&P Global, critical information and analytics provider IHS Markit (INFO) and provider of data-analytics solutions Verisk Analytics (VRSK).
4 Trends Shaping the Future of Information Industry
Demand Environment Healthy: The industry is mature and has witnessed a progressively-growing business environment in the past few years. Revenues, income and cash flows have increased steadily.
Emergency of Customer-centric Solutions: The coronavirus pandemic has stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. This, in turn, has opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Digital Transformation is the Key: Companies that have either completed or progressed significantly with their digital transformation journeys are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates the time to market, and boosts a firm's ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: Automation in assembling and use of big data in enhancing business information will fuel the industry's growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy, and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #130, which places it in the bottom 48% of more than 250 Zacks industries.
The group's Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily lowering their estimates. In the past year, the industry's consensus earnings estimate for 2021 has moved 13.7% south.
Despite the gloomy prospects, we present a few stocks that you may want to consider for your portfolio. But before that it's worth taking a look at the industry's performance and current valuation.
Industry Underperforms Sector and the S&P 500
Over the past year, the Zacks Business – Information Services industry has underperformed the S&P 500 composite but outperformed the broader sector.
While the industry has depreciated 0.5%, the S&P 500 composite rallied 34.4%, while the broader sector fell 1.1%.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business information services stocks, the industry is currently trading at 30.09 compared with the S&P 500's 21.75 and the sector's 30.42.
Over the past five years, the industry has traded as high as 30.77X, as low as 19.64X and at the median of 23.44X.
3 Business Information Service Stocks to Consider
We are presenting three stocks that are well positioned to grow in the near term.
Nielsen: The measurement giant has a dominant position in the U.S. television market. It is the leading and primary provider of audience measurement information and analytics for TV in the country.
As new technologies enable video viewing online, both content providers and advertisers are looking for a known and trusted source to compare performance and reach. Since they have traditionally relied on Nielsen for TV, it positions the company very strongly to cater to this trend.
Nielsen currently carries a Zacks Rank #2 (Buy) and the Zacks Consensus Estimate for 2021 EPS has moved 7.9% north in the past 60 days. The stock has surged 69.5% over the past year.
You can see the complete list of today's Zacks #1 Rank stocks here.
TransUnion: This risk and information solutions provider has a business model that ensures highly recurring and diversified revenue streams. In response to the COVID-19 pandemic, the company continues to follow the work-from-home model, and is trying to be disciplined in managing investment priorities and cost structure.
It recently rolled out the CreditVision Acute Relief Suite, a collection of tools for lenders and insurers to evaluate customers affected by the coronavirus mayhem. The recent acquisition of Signal is likely to bolster TransUnion's marketing abilities through people-based identity-enabled marketing solutions.
TransUnion also carries a Zacks Rank of 2. The Zacks Consensus Estimate for the ongoing-year EPS has moved up 7.9% in the past 60 days. The stock has rallied 22.2% in the past year.
S&P Global: The company provides ratings, benchmarks, analytics, and data to the capital and commodity markets. Amid the pandemic, successful operations from remote locations, along with productivity programs, have been aiding its top line. Cost-reduction measures, such as hiring freeze, reduction in travel, advertising and promotion expenses, and reduced use of outside professional services, have kept its bottom line in a good shape.
S&P Global carries a Zacks Rank #3 (Hold), at present. The Zacks Consensus Estimate for 2020 EPS has been revised 3% upward in 60 days' time. The stock has appreciated 26% over the past year.
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Nielsen Holdings Plc (NLSN) : Free Stock Analysis Report
TransUnion (TRU) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
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