On Jul 7, 2014, we issued an updated research report on
Equifax is a leading information services provider to consumers
and businesses. The company's offerings are of great importance to
its customers as they use the credit information and related
analytical services and data to process applications for new credit
cards, automobile loans, home and equity loans and other consumer
loans. This helps customers understand, manage and protect their
clients' information and take better-informed financial decisions.
We believe that a solid product portfolio and a clear understanding
of the sector will keep Equifax ahead of its peers.
Equifax also serves a wide range of industries, such as
financial, mortgage, consumer, commercial, telecommunications,
retail, human resources and automotive. This diversified client
base is extremely beneficial as weakness in any sector can be
balanced with strength in the others.
Additionally, the company has made strategic acquisitions to
supplement its core business. During 2013, Equifax acquired several
small companies in addition to TrustedID, a direct-to-consumer
identity protection business. Moreover, in Jan 2014, Equifax
acquired TDX Group, a U.K.-based debt-management firm, for $327.0
million. We believe that the acquisition will enable Equifax to
provide a broad insight into consumer performance, financial
status, capabilities of customers and market opportunities.
Moreover, it will further solidify Equifax's presence in the U.K.,
which in turn will boost its revenues.
Apart from acquisitions, Equifax has remained enthusiastic about
forming joint ventures that could expand its business
internationally. Joint ventures keep operating costs down and need
no integration time while diversifying the revenue source. To tap
the immense growth opportunity in the Brazilian credit data market,
Equifax merged credit reporting operations of its Brazilian
subsidiary with Boa Vista Servicos S.A., the second-largest
consumer credit bureau in Brazil. We believe that the company's
investments in the joint ventures will yield desired results and
help it to register solid growth over the long term.
However, Equifax has a highly leveraged balance sheet. The
company had a net debt position of $1.53 billion at the end of
first-quarter 2014 (ended Mar 31, 2014), which increased from $1.21
billion at the end of 2013. Thus, the company is in constant need
of generating adequate operating cash flows to service its
Going forward, competition from
Automatic Data Processing Inc.
), Moody's Corp. and uncertainty in the mortgage sector are the
Currently, Equifax has a Zacks Rank #3 (Hold). A better-ranked
stock in the technology sector is
), which has a Zacks Rank #2 (Buy).
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