D&B reported upbeat second-quarter 2014 results. Both earnings
per share as well as revenues beat the Zacks Consensus Estimate.
The company provided cautious guidance due to sluggish growth
prospects of the core risk management solution business. This is
expected to remain an overhang on the stock. We believe that
D&B's high-margin business model, strong international growth
potential, strategic investments, accretive cloud-based
acquisitions and aggressive share buyback will drive growth in the
long run. Moreover, partnerships with the likes of Salesforce.com,
Sugar CRM and First Rain will help the company to expand its
data-as-a-service model, which in turn will boost top-line growth.
However, increasing competition will continue to hurt revenues and
profitability in 2014. Moreover, a high debt level remains a
concern. Thus, we maintain our Neutral recommendation and set a
price target of $122.00.
Based in Short Hills, NJ, The Dun & Bradstreet Corporation
(DNB) is a leading provider of commercial information that serves a
diverse set of customer needs globally. D&B reported revenues
(including revenues from divested business) of $1.66 billion in
2013. The company has two core product lines Risk Management
Solutions and Sales & Marketing Solutions.
Risk Management Solutions (63% of revenues in 2013) comprise
traditional solutions (61% of revenues in 2013), Value-Added Risk
Management solutions (31% of segment revenues) and Supply
Management solutions (8% of revenues in 2013). The traditional
solutions primarily include the core DNBi product line, as well
database reports, which are used primarily by customers for making
decisions about new credit applications. Value-added Solutions
generally support automated decision-making and portfolio
management. Customers use Supply Management Solutions to better
understand the financial risk of their supply chain.
Sales and Marketing Solutions (37% of revenues in 2013) comprise
the company's traditional solutions, such as marketing lists,
labels, education business and electronic licensing solutions (38%
of segment revenues). Value-added Solutions (62.0% of segment
revenues) offer data management software like Optimizer and
D&B360 product platform that integrates data into third-party
Customer Relationship Management (CRM) applications.
D&B serves banks and other credit & financial
institutions, manufacturers, wholesalers, retailers, government
agencies, insurance companies and telecommunication companies, as
well as sales, marketing and business development professionals.
None of the customers accounted for more than 10% of revenues in
D&B faces significant competition in most of its geographic
markets not only from local information providers but also from the
likes of Equifax, Experian, infoGROUP and Graydon.
Dun & Bradstreet Corporation (DNB): Read the
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