TransUnion (TRU) Gains From Acquisition Amid Stiff Competition

TransUnion TRU has had an impressive run over the past six months, wherein its shares have gained 21.7%, outperforming the 1.6% rally of the industry it belongs to and the 15.9% rise of the Zacks S&P 500 Composite.

TRU reported impressive first-quarter 2024 results. Quarterly adjusted earnings (adjusting 59 cents from non-recurring items) of 92 cents per share surpassed the consensus mark by 13.6% and grew 15% year over year. Total revenues of $1 billion surpassed the consensus mark by 4.5% and increased 8.6% from the year-ago quarter.

TransUnion Revenue (TTM)

 

TransUnion Revenue (TTM)

TransUnion revenue-ttm | TransUnion Quote

How Is TRU Doing?

TransUnion’s gigantic treasure trove of data is its most distinguishing asset. Perhaps this poses the biggest hindrance to entry for competitors. A new company will have to incur colossal costs in order to acquire or build such data, thereby making it extremely difficult to compete with what TRU already has. This solidifies TransUnion's ability to sustain its competitive advantage and market share.

TransUnion’s acquisition strategy played a pivotal role in its growth over the last five to six years. The strategy emphasizes investing in unique and differentiated data assets, acquiring new capabilities to grow in vertical markets and expanding international presence. In 2022, TransUnion acquired Verisk Financial Services, the financial services business unit of Verisk Analytics, for $515 million in cash. The acquired assets are anticipated to assist TransUnion in offering improved insights and solutions that should help raise financial inclusion, and improve fraud prevention and risk management.

TransUnion's current ratio (a measure of liquidity) at the end of the first quarter of 2024 was 1.65, higher than the preceding quarter's 1.47 and the year-ago quarter’s 1.57. A current ratio of more than 1 often indicates that the company will easily pay off its short-term obligations.

TransUnion serves a highly competitive market. Its competitors widely vary according to its business segment, geographical market and industry vertical that its solutions address. The heightened competition prohibits its pricing power and pressurizes its bottom line.

Zacks Rank & Stocks to Consider

TRU Global currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Kyndryl Holdings, Inc. KD and Sprinklr CXM.

Kyndryl currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KD has a long-term earnings growth expectation of 5%. It delivered a trailing four-quarter earnings surprise of 29.5%, on average.

Sprinklr has a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 30%.

CXM delivered a trailing four-quarter earnings surprise of 176.8%, on average.

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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.

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