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TransUnion (TRU - Free Report) has had an impressive run over the past six months, wherein its shares have gained 23%, outperforming the 15.7% rally of the industry it belongs to and the 11.4% rise of the Zacks S&P 500 Composite.
TRUreported impressive second-quarter 2024 results. Quarterly adjusted earnings of 99 cents per share (adjusting 55 cents from non-recurring items) beat the consensus mark by 1% and increased 15.1% on a year-over-year basis. Total revenues of $1 billion surpassed the consensus mark by 1.6% and grew 7.5% from the year-ago quarter.
How is TRU Doing?
TransUnion’s most important asset is its enormous treasure trove of data that, perhaps, is the biggest hindrance for other players. Acquiring or building such data comes at considerable costs, making it difficult for a new company to create the database that TransUnion already harbors. This reinforces TRU’s ability to sustain its competitive advantage and protect its market share.
The company’s acquisition strategy played a vital role in its growth over the last five to six years. The strategy targets investment in unique and differentiated data assets, acquiring new capabilities for expanding in vertical markets, and expanding international footprints.
In 2022, TransUnion completed the acquisition of Verisk Financial Services for $515 million in cash. The acquired asset assisted TRU to offer better insights and solutions that elevate financial inclusion, and improve fraud mitigation and risk management. In 2021, the company acquired Neustar, which strengthened its competitive position in the fast-growing digital marketing and identity fraud marketplaces. These buyouts helped TransUnion improve its portfolio diversification and perform better while entering into newer markets.
TRU’s current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 1.66, higher than the preceding quarter's 1.65 and the year-ago quarter’s 1.51. A current ratio of more than 1 often insinuates a company’s ability to pay off short-term debts with ease.
The positive aspects highlighted earlier do not take away from the fact that TransUnion's ability to perform is susceptible to overall macroeconomic conditions. Interest rates, employment levels, consumer confidence, accessibility of affordable credit and capital, inflation, and housing demand are macroeconomic factors that are likely to affect the top line. Trends, such as the demand for information services in the insurance, financial services and healthcare industries, might affect revenues as well. Adverse developments in the debt, consumer credit and financial services markets could affect the company’s financial health.
TransUnion faces stiff competition, wherein its competitors vary considering business segments, geographical markets and industry verticals that its solutions address. The high degree of competition restricts the company’s pricing power and hampers the bottom line.
Image: Bigstock
Acquisitions Fuel TransUnion's Growth Amid Fierce Competition
TransUnion (TRU - Free Report) has had an impressive run over the past six months, wherein its shares have gained 23%, outperforming the 15.7% rally of the industry it belongs to and the 11.4% rise of the Zacks S&P 500 Composite.
TRUreported impressive second-quarter 2024 results. Quarterly adjusted earnings of 99 cents per share (adjusting 55 cents from non-recurring items) beat the consensus mark by 1% and increased 15.1% on a year-over-year basis. Total revenues of $1 billion surpassed the consensus mark by 1.6% and grew 7.5% from the year-ago quarter.
How is TRU Doing?
TransUnion’s most important asset is its enormous treasure trove of data that, perhaps, is the biggest hindrance for other players. Acquiring or building such data comes at considerable costs, making it difficult for a new company to create the database that TransUnion already harbors. This reinforces TRU’s ability to sustain its competitive advantage and protect its market share.
The company’s acquisition strategy played a vital role in its growth over the last five to six years. The strategy targets investment in unique and differentiated data assets, acquiring new capabilities for expanding in vertical markets, and expanding international footprints.
TransUnion Revenue (TTM)
TransUnion revenue-ttm | TransUnion Quote
In 2022, TransUnion completed the acquisition of Verisk Financial Services for $515 million in cash. The acquired asset assisted TRU to offer better insights and solutions that elevate financial inclusion, and improve fraud mitigation and risk management. In 2021, the company acquired Neustar, which strengthened its competitive position in the fast-growing digital marketing and identity fraud marketplaces. These buyouts helped TransUnion improve its portfolio diversification and perform better while entering into newer markets.
TRU’s current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 1.66, higher than the preceding quarter's 1.65 and the year-ago quarter’s 1.51. A current ratio of more than 1 often insinuates a company’s ability to pay off short-term debts with ease.
The positive aspects highlighted earlier do not take away from the fact that TransUnion's ability to perform is susceptible to overall macroeconomic conditions. Interest rates, employment levels, consumer confidence, accessibility of affordable credit and capital, inflation, and housing demand are macroeconomic factors that are likely to affect the top line. Trends, such as the demand for information services in the insurance, financial services and healthcare industries, might affect revenues as well. Adverse developments in the debt, consumer credit and financial services markets could affect the company’s financial health.
TransUnion faces stiff competition, wherein its competitors vary considering business segments, geographical markets and industry verticals that its solutions address. The high degree of competition restricts the company’s pricing power and hampers the bottom line.
Zacks Rank & Stocks to Consider
TRU carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report) and Barrett Business Services (BBSI - Free Report) .
AppLovin flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 21.1%, on average.
Barrett Business Services has a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 15%.
BBSI delivered a trailing four-quarter earnings surprise of 31.9%, on average.