Equifax Inc. EFX is benefiting from the growing top-line momentum, which is expected to continue throughout the coming years. Acquisitions play a vital role in supplementing the company’s core business. Seasonality and low liquidity weigh on Equifax’s performance.
EFX reported impressive second-quarter 2024 results. Adjusted earnings (excluding 51 cents from non-recurring items) were $1.82 per share, outpacing the Zacks Consensus Estimate by 5.8% and increasing 6.4% on a year-over-year basis. Total revenues of $1.4 billion surpassed the consensus estimate by a slight margin and jumped 8.6% from the year-ago quarter.
How is EFX Faring?
Equifax witnessed its revenues compound at an annual growth rate (CAGR) of 8.5% in the last five years (2019-2023). We expect EFX to continue its revenue growth momentum over the coming years. This anticipation is based on the fact that synergies from acquisitions, consumer credit activity, product innovation, strategies to foster enterprise growth and effective business execution will drive the momentum of the company.
EFX has made acquisitions to supplement its core business. These acquisitions enabled the company to provide better insights into consumer performance, finances and market opportunities. In 2023, Boa Vista Servicos was acquired, which expanded EFX’s presence in Brazil and enabled customers of the acquired company to use the expansive international capabilities of Equifax.
Midigator LLC and Efficient Hire were acquired by the company in 2022. Midigator LLC expanded Equifax’s across the globe in digital identity and fraud prevention solutions, whereas Efficient Hire expanded Equifax’s portfolio of employer and HR-focus HR-focused solutions and boosted its ability to assist clients manage their hiring and employment needs.
Dividend-seeking investors will find EFX appealing. The company paid out dividends of $191.8 in 2023, $191.1 million in 2022 and $190 million in 2021. Some other stocks that pay consistent dividends are TransUnion TRU and Verisk Analytics, Inc. VRSK. TRU paid out $81.8 million, $77.8 million and $69.8 million in 2023, 2022 and 2021, respectively. Dividends paid by VRSK amounted to $196.8 million, $195.2. million and $188.2 million in 2023, 2022 and 2021, respectively.
Equifax’s offerings are important to its customers as they use 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. EFX utilizes advanced statistical techniques and tools to analyze its datasets, creating customized insights, decision-making solutions and processing services. This enables customers to understand, manage and protect their clients’ data and make informed financial decisions.
Meanwhile, seasonality makes it difficult to forecast the prospects of the company. We believe that year-over-year comparisons are more important to be taken into consideration for EFX since seasonal fluctuations weigh on it.
Equifax's current ratio (a measure of liquidity) at the end of the second quarter of 2024 was pegged at 0.79, lower than 1.2 in the year-ago quarter. A current ratio of less than 1 implies that the company may have issues paying off its short-term obligations.
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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.
