Equifax (EFX) Likely to Beat on Q1 Earnings: Here's Why

We expect Equifax Inc.EFX to beat on earnings expectations when it reports first-quarter 2017 earnings results after the market closes on Apr 26.

Last quarter, the company posted a positive earnings surprise of 2.90%. Equifax boasts a solid earnings track record, having beaten estimates in each of the trailing four quarters. The average earnings surprise over the last four quarters is a positive 4.99%.

We expect the company to post an earnings beat again in the soon-to-be-reported quarter.

Why a Likely Positive Surprise?

Our proven model shows that Equifax is likely to beat on earnings because it has the right combination of two key ingredients.

Zacks ESP: The Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at +0.71%. This is very meaningful and a major indicator of a likely earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Equifax carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have significantly higher chances of beating earnings estimates. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

The combination of Equifax's Zacks Rank #3 and ESP of +0.71% makes us confident of an earnings beat in the upcoming report.

Equifax, Inc. Price and EPS Surprise

Equifax, Inc. Price and EPS Surprise | Equifax, Inc. Quote

Factors to Consider

Equifax is a leading information services provider to consumers and businesses. The company's products and services help customers make better credit and marketing decisions via its database of consumer and business information derived from numerous types of credit, financial, public record, and demographic data.

Management's efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America are anticipated to aid first-quarter results. Also, the company's strong correlation with the consumer and financial markets, as well as exposure in the U.S. and Europe are likely to propel growth.

Moreover, in September last year, Equifax entered into a strategic alliance with BizEquity, a global leader of business valuation knowledge and big data. Per the agreement, the companies will introduce a business valuation tool that will "help financial professionals prospect more effectively and small business owners better understand their business' worth."

By partnering with BizEquity, Equinix expects to cater to over 900,000 financial professionals. We believe that the agreement will benefit the company by expanding its customer base and boosting the top-line performance in the to-be-reported quarter.

Notably, shares of Equifax outperformed the Zacks categorized Financial Transaction Services industry in the last one year. While the stock gained 18.5% of its value in the said period, the industry recorded growth of 12.3%.

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Fiserv Inc. FISV , with an Earnings ESP of +0.85% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Seagate Technology plc STX , with an Earnings ESP of +3.77%, and a Zacks Rank #2.

PayPal Holdings Inc. PYPL , with an Earnings ESP of +3.03%, and a Zacks Rank #3.

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Seagate Technology PLC (STX): Free Stock Analysis Report

Equifax, Inc. (EFX): Free Stock Analysis Report

PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report

Fiserv, Inc. (FISV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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