Equifax Inc. (EFX) has gained significantly on the back of its ongoing growth initiatives, product innovation, shareholder-friendly moves and impressive quarterly results. Notably, the company amassed a return of 11.5% since Oct 1 and 20.8% year-to-date.
Some of the optimism surrounding the stock may be attributed to Equifax’s strong correlation to consumer and financial markets as well as its U.S. and European exposure, which is seeing a gradual uptick. Moreover, strategic initiatives targeted at product innovation, expansion of data assets through acquisitions and continuous share gains in North America are encouraging.
Apart from this, Equifax has been entering into partnerships to expand its product portfolio and boost market share.
The regular dividends and share repurchases also keep investors interested in the stock. During third-quarter 2014, the company paid dividends of 25 cents per share and repurchased stocks worth $113.1 million. It has also initiated a new buyback plan worth $400 million in Sep 2014.
The company’s performance in the last-reported quarter was also decent with the bottom line beating the Zacks Consensus Estimate despite the top line missing the same. The company’s adjusted earnings per share from continuing operations increased 12.2% year over year to $1.01 mainly due to 7.2% rise in revenues and improvement in margins. Notably, Equifax has surpassed the Zacks Consensus Estimate in three out of the last four quarters with an average surprise of 1.6%.
Further, considering the recent domestic and international business environment, current foreign exchange rates and the expected slowdown in mortgage activities, Equifax provided slightly tepid fourth-quarter guidance. Revenues are expected to range between $615 million and $620 million (mid-point $617.5 million), while the Zacks Consensus Estimate stands at $618 million. Earnings are forecasted between 99 cents and $1.03 (mid-point $1.01). The Zacks Consensus Estimate stands at $1.02.
The improving mortgage environment could be a positive for the stock. However, stiff competition and a highly leveraged balance sheet are the concerns.
Equifax currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the broader technology sector include Alliance Data Systems Corporation (ADS), Envestnet Inc. (ENV) and MasterCard Incorporated (MA). All these stocks have a Zacks Rank #2 (Buy).
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