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Equifax (EFX) Down 6.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Equifax (EFX - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Equifax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equifax Beats on Q3 Earnings
Equifax reported mixed third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same.
EFX’s adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, outpacing the Zacks Consensus Estimate by a slight margin and increasing by 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis.
Segmental Level Information For EFX
Revenues in the Workforce Solutions segment totaled $620 million, growing 7% from the year-ago quarter and beating our anticipation of $618.1 million. Within the segment, Verification Services’ revenues of $524.9 million were up 14% from the year-ago quarter’s actual. Employer Services’ revenues of $95.1 million were down 19% on a year-over-year basis.
USIS segment’s revenues were $476.9 million, grew 12% from the year-ago quarter and outpacing our expectation of $459.4 million. Within the segment, Online Information Solutions’ revenues of $381.1 million grew 9% year over year. Mortgage Solutions’ revenues of $38 million increased 39% from the year-ago quarter. Financial Marketing Services’ revenues were $57.8 million, which gained 14% on a year-over-year basis.
Revenues in the International division amounted to $344.9 million, up 9% and 18% year over year on a reported basis and a local currency basis, respectively. The metric missed our expectation of $366.4 million.
Latin America’s revenues of $96.7 million increased 21% from the year-ago quarter on a reported basis and 58% on a local currency basis. Revenues from Europe amounted to $94.9 million, up 11% year over year on a reported and 9% on a local currency basis. Revenues from Asia Pacific were $88.5 million, increasing 11% from the year-ago quarter on a reported basis and 2% on a local currency basis. Canada’s revenues of $64.8 million were flat with the year-ago reported quarter on a reported basis and 1% on a local currency basis.
Equifax's Operating Results
Adjusted EBITDA in the third quarter of 2024 amounted to $471.9 million, indicating an 8% increase on a year-over-year basis. The adjusted EBITDA margin was 32.7%, which declined 40 basis points from the year-ago quarter.
Workforce Solutions’ adjusted EBITDA margin was 51.6% compared with 50.9% a year ago. Adjusted EBITDA margin for the USIS division was 33.9% compared with 34.2% in the second quarter of 2023. The adjusted EBITDA margin for the international segment was 27.7% in comparison with 26.2% in the year-ago quarter.
EFX's Balance Sheet & Cash Flow
EFX exited the third quarter with cash and cash equivalents of $468.2 million compared with $181.9 million at the end of the second quarter of 2024. The company has a long-term debt of $4.7 billion, flat with the preceding quarter.
Cash generated from operating activities amounted to $479.5 million, whereas capital expenditure totaled $124 million. The company distributed $48.4 million as dividends in the quarter.
Equifax's Q4 and 2024 Outlook
For the fourth quarter of 2024, EFX expects its revenues guidance to $ 1.44-$1.46 billion. It anticipates the guidance for adjusted earnings per share (EPS) to $2.08-$2.18.
For 2024, Equifax updated its revenue guidance to $5.70-$5.72 billion compared with the previous quarter’s view of $5.69-$5.75 billion. The company updated the adjusted EPS guidance to $7.25-$7.35 from the previous quarter’s view of $7.22-$7.47.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Equifax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equifax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Equifax (EFX) Down 6.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Equifax (EFX - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Equifax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Equifax Beats on Q3 Earnings
Equifax reported mixed third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same.
EFX’s adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, outpacing the Zacks Consensus Estimate by a slight margin and increasing by 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis.
Segmental Level Information For EFX
Revenues in the Workforce Solutions segment totaled $620 million, growing 7% from the year-ago quarter and beating our anticipation of $618.1 million. Within the segment, Verification Services’ revenues of $524.9 million were up 14% from the year-ago quarter’s actual. Employer Services’ revenues of $95.1 million were down 19% on a year-over-year basis.
USIS segment’s revenues were $476.9 million, grew 12% from the year-ago quarter and outpacing our expectation of $459.4 million. Within the segment, Online Information Solutions’ revenues of $381.1 million grew 9% year over year. Mortgage Solutions’ revenues of $38 million increased 39% from the year-ago quarter. Financial Marketing Services’ revenues were $57.8 million, which gained 14% on a year-over-year basis.
Revenues in the International division amounted to $344.9 million, up 9% and 18% year over year on a reported basis and a local currency basis, respectively. The metric missed our expectation of $366.4 million.
Latin America’s revenues of $96.7 million increased 21% from the year-ago quarter on a reported basis and 58% on a local currency basis. Revenues from Europe amounted to $94.9 million, up 11% year over year on a reported and 9% on a local currency basis. Revenues from Asia Pacific were $88.5 million, increasing 11% from the year-ago quarter on a reported basis and 2% on a local currency basis. Canada’s revenues of $64.8 million were flat with the year-ago reported quarter on a reported basis and 1% on a local currency basis.
Equifax's Operating Results
Adjusted EBITDA in the third quarter of 2024 amounted to $471.9 million, indicating an 8% increase on a year-over-year basis. The adjusted EBITDA margin was 32.7%, which declined 40 basis points from the year-ago quarter.
Workforce Solutions’ adjusted EBITDA margin was 51.6% compared with 50.9% a year ago. Adjusted EBITDA margin for the USIS division was 33.9% compared with 34.2% in the second quarter of 2023. The adjusted EBITDA margin for the international segment was 27.7% in comparison with 26.2% in the year-ago quarter.
EFX's Balance Sheet & Cash Flow
EFX exited the third quarter with cash and cash equivalents of $468.2 million compared with $181.9 million at the end of the second quarter of 2024. The company has a long-term debt of $4.7 billion, flat with the preceding quarter.
Cash generated from operating activities amounted to $479.5 million, whereas capital expenditure totaled $124 million. The company distributed $48.4 million as dividends in the quarter.
Equifax's Q4 and 2024 Outlook
For the fourth quarter of 2024, EFX expects its revenues guidance to $ 1.44-$1.46 billion. It anticipates the guidance for adjusted earnings per share (EPS) to $2.08-$2.18.
For 2024, Equifax updated its revenue guidance to $5.70-$5.72 billion compared with the previous quarter’s view of $5.69-$5.75 billion. The company updated the adjusted EPS guidance to $7.25-$7.35 from the previous quarter’s view of $7.22-$7.47.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Equifax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Equifax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.