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TransUnion (TRU) Q4 Earnings: What's in Store this Time?

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Premium business service company TransUnionTRU is scheduled to release fourth-quarter 2016 results before the market opens on Feb 14. In the last reported quarter, adjusted earnings matched the Zacks Consensus Estimate. The company recorded an average positive earnings surprise of 9.95% over the trailing four quarters, beating estimates thrice.

Let's see how things are shaping up prior to this announcement.

Factors to Consider

TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flows. In addition, the inherent nature and significance of its solutions in customers' decision-making steps endow it with high customer retention and revenue visibility. Impressively, it deals with the 10 largest U.S. banks, the top five credit card issuers, the biggest 25 auto lenders and thousands of healthcare providers and federal, state and local government agencies. Also, the company keeps making significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. This enables TransUnion to expand its business and improve its cost structure.

During the to-be-reported quarter, TransUnion strategically collaborated with PeerIQ, a provider of data and analytics, to offer enhanced transparency and insight to various lending markets. The deal will enable the company to cater to the customers' growing demand for through-cycle data histories, robust models and indices, cross-asset class evaluations and consensus estimation. This is likely to generate incremental revenues for it in the impending quarter.

As emerging market economies continue to develop and mature, the company is becomes well positioned to gain from the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion's consumer solutions.

For the fourth quarter, consolidated revenues are expected to come in the range of $421 million to $426 million, representing an increase of approximately 9-10% on a constant currency basis from the prior-year quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter is likely to be in the range of $157.5-$159.5 million, up 15-16% year over year. Adjusted earnings are expected to be within 34-35 cents per share, up 11-15% year over year.

Earnings Whispers

Despite inherent strengths, our proven model does not conclusively show that TransUnion is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

TransUnion Price and EPS Surprise

TransUnion Price and EPS Surprise | TransUnion Quote

Zacks Rank: TransUnion has a Zacks Rank #2. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Chesapeake Lodging Trust CHSP has an Earnings ESP of + 2.17% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

STAG Industrial, Inc. STAG has an Earnings ESP of +2.50% and a Zacks Rank #3.

CubeSmart CUBE has an Earnings ESP of +2.70% and a Zacks Rank #3.

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CubeSmart (CUBE): Free Stock Analysis Report

TransUnion (TRU): 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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