Zacks Industry Outlook Highlights Verisk, FactSet Research and TransUnion
For Immediate Release
Chicago, IL – September 14, 2023 – Today, Zacks Equity Research discusses Verisk Analytics, Inc. VRSK, FactSet Research Systems Inc. FDS and TransUnion TRU.
Industry: Business Information Services
Link: https://www.zacks.com/commentary/2148473/3-business-information-stocks-to-watch-from-a-prospering-industry
The increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to address the pandemic-induced rising demand for services that ensure risk mitigation, cost reduction and productivity improvement.
The heightening technology adoption is benefiting companies like Verisk Analytics, Inc., FactSet Research Systems Inc. and TransUnion, supporting them to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a 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, preferences and demographics.
Amid the pandemic, the key focus within the industry is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making, to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider, S&P Global and the provider of data analytics solutions, Verisk Analytics.
4 Trends Shaping the Future of the Information Industry
Healthy Demand Environment: The industry is mature and has witnessed a progressively growing business environment in the past few years. Revenues, income and free cash flows are likely to see healthy growth during the post-pandemic economic improvement.
Demand for Customer-Centric Solutions: The pandemic has stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. These, in turn, have opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Increased Adoption of Technologies: Digital transformation, automation in assembling and the 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 Bright Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #112, which places it in the top 44% of more than 250 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business – Information Services industry has outperformed the Zacks Business Services sector but underperformed the S&P 500 composite.
The industry has risen 7.2% compared with the S&P 500 composite and the broader sector’s growth of 13.3% and 3%, respectively, in the said time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing business information services stocks, the industry is currently trading at 26.80X compared with the S&P 500’s 19.18X and the sector’s 23.86X.
Over the past five years, the industry has traded as high as 27.53X and as low as 21.13X, with a median of 25.69X.
3 Business Information Service Stocks in Focus
We are presenting three stocks that are well-positioned to grow in the near term.
Verisk Analytics: This provider of data analytics solutions to the insurance markets has a robust growth strategy that focuses on organic growth, product development and acquisitions. Verisk continues to invest in people, data sets, analytic solutions, technology and complementary businesses to keep itself updated with changing requirements in the markets it serves.
The company is maintaining its focus on increasing solution penetration with customers, developing new proprietary databases and predictive analytics, and expanding into new customer sectors. We expect the company’s organic revenues to increase more than 9% in 2023.
The March 2022 acquisition of Opta has expanded Verisk’s footprint in the Canadian market. Another acquisition, Automated Insurance Solutions, increased the company’s automation capabilities in the claims ecosystem, helping it to expand geographically.
Verisk currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2023 EPS has increased 3.6% in the past 60 days to $5.71. The stock has gained 35.2% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FactSet: This integrated financial information and analytical applications provider is currently benefiting from a growing customer base and strong global presence. In fiscal 2022, organic revenues improved 9.8% to $1.75 billion. The company added 1085 clients, taking the total number to 7,538. The company’s ASV of $1.84 billion increased 9.3% year over year.
Region-wise, FactSet’s ASV generated $1.26 billion in revenues from the United States, up 9.3% year over year. Organic ASV from the EMEA and Asia Pacific regions was $486 million and $191.7 million, up 8.4% and 12% year over year, respectively. We expect organic revenues to grow 8.6% and number of clients to increase 5.9% year over year in fiscal 2023.
FactSet maintains a performance-based organizational culture with a focus on talent and technology. The company remains focused on expanding its digital platform, delivering cloud-based data and analytics to clients. It emphasizes the extensive use of technology to fast-track product creation and content collection.
FactSet currently carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2023 EPS has remained unchanged at $15.07 in the past 60 days. The stock has gained 3.4% in the past six months.
TransUnion: This global consumer credit reporting agency has an addressable market that includes the burgeoning Big Data and analytics market, which is expanding at a rapidly accelerating pace as companies realize the advantages of building an analytical enterprise where decisions are derived from data and insights.
To capitalize on the immense potential growth, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database. We expect the company’s revenues to increase more than 4.2% in 2023.
The April 2022 acquisition of Verisk Financial Services is helping TransUnion offer enhanced insights and solutions, as well as improve fraud prevention and risk management. The September 2021 acquisition of Neustar has strengthened TRU’s competitive position in the fast-growing digital marketing and identity fraud marketplaces.
TransUnion currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2023 EPS has been revised slightly upward in the past 60 days to $3.59. The stock has gained 31.5% in the past six months.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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