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TRU or SPGI: Which is the Better Stock Post Q4 Earnings?

The earnings season is at its tail end with about 398 S&P 500 companies having reported results till Feb 16, 2018. Various analysis and comparisons are being done by industry peers to gauge the underlying metrics and relative performance. Let us perform a similar analysis of two leading players in the Business Services sector to pick the best investment option based on the fourth-quarter 2017 earnings scorecard.

Fourth-Quarter Earnings

TransUnionTRU reported strong results with healthy year-over-year increase in revenues and earnings on the back of attractive new product launches, rapid vertical growth and solid performance in the international markets. Adjusted earnings for the quarter were $94.8 million or 50 cents per share compared with $81.6 million or 44 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by a penny. GAAP earnings for the reported quarter were $245.1 million or $1.29 per share compared with $49.5 million or 27 cents per share in the year-ago quarter. The surge was aided by benefits from the newly enacted tax law.

Total quarterly revenues came in at $506.1 million compared with $435.9 million in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $488 million. This healthy top-line growth was aided by strong year-over-year rise in revenues in each of the business segments. TransUnion carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

S&P Global, Inc.SPGI reported solid results with adjusted net income of $474 million or $1.85 per share compared with $334 million or $1.28 per share in the year-earlier quarter. Earnings comfortably beat the Zacks Consensus Estimate of $1.63. The rise in the bottom line came on the back of robust organic revenue growth across all segments. GAAP earnings for the quarter were $263 million or $1.02 per share compared with $537 million or $2.05 per share in the year-ago quarter. The significant year-over-year decrease in earnings was primarily due to gains culminated in the prior-year quarter from business divestitures. Moreover, tax expenses incurred due to the enactment of the Tax Cuts and Jobs Act in fourth-quarter 2017 further reduced earnings.

Revenues for the quarter were $1,589 million compared with $1,399 million in the year-ago quarter. Quarterly revenues beat the Zacks Consensus Estimate of $1,503 million. Top-line growth was fueled by solid performance across all segments. S&P Global carries a Zacks Rank #2.

Guidance

Concurrent with the earnings release, TransUnion provided bullish 2018 outlook. For full-year 2018, revenues are likely to be between $2.12 billion and $2.14 billion, representing a 9-10% increase on a constant currency basis. Adjusted earnings per share are expected to be between $2.26 and $2.31, an increase of 20-23% year over year.

S&P Global also provided bullish full-year 2018 guidance. Adjusted earnings are expected to be $8.45-$8.60 per share. On a GAAP basis, EPS is expected to be in the range of $8.15 to $8.30. Also, free cash flow of $2.3 billion is expected.

Price Performance

In the last three months, TransUnion has underperformed the industry with an average return of 6.2% compared with 7.5% gain for the latter. S&P Global has outperformed the industry with an average return of 15.6% during the same time frame.

Estimate Revisions

Over the last 30 days, TransUnion's current-quarter estimates increased to 51 cents per share from 48 cents while that for the current year increased from $2.15 to $2.30.

S&P Global's current-quarter estimates increased to $1.97 per share from $1.77 while that for the current year increased from $7.44 to $8.52.

To Sum Up

Based on the current scenario, although there is not much to choose from as the stocks seem to match on most counts, S&P Global seems to have trumped TransUnion on the basis of positive estimate revisions and price performance and stands out as a better investment option.

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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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