Premium business service company TransUnionTRU is scheduled to release fourth-quarter 2015 results on Feb 16, after the market closes. The average earnings surprise over the last four quarters is 3.57%. Let's see how things are shaping up prior to this announcement.
Factors to Consider
TransUnion's business model contains 3 segments: data, analytics and technology. Its customers are spread across various sectors, including financial services, insurance and healthcare industries. The company deals with 9 of the 10 largest U.S. banks, top 5 credit card issuers, biggest 25 auto lenders and thousands of healthcare providers, as well as federal, state and local government agencies.
TransUnion recently acquired 71% ownership interest in CIFIN (Central de Informacion Financiera), one of two primary Colombian credit bureaus. The company's growth strategy focuses on international expansion in emerging markets, and Latin America is an important region of focus. This acquisition is likely to strengthen TransUnion's Latin America portfolio, where the company is already a market leader in five Central American countries and has a strong presence in Brazil, Chile and Mexico.
The company expects fourth-quarter revenues to be in the range of $367 million and $369 million, an increase of approximately 9.0% to 10.0% year over year. Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) is expected to be in the range of $125 million and $127 million, an increase of approximately 8%-9% year over year.
For full year 2015, revenue is expected to be approximately $1.489 billion, an increase of approximately 14% year over year. Adjusted EBITDA is expected to be approximately $516 million, an increase of approximately 14% year over year. However, TransUnion expects unfavorable foreign currency translations to weigh on its revenues and earnings.
Our proven model does not conclusively state that TransUnion is likely to beat earnings in the upcoming quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. This is not the case here as we will see below.
Zacks ESP : TransUnion has an Earnings ESP of 0.00% for the quarter, as the Most Accurate estimate stands in line with the Zacks Consensus Estimate at 24 cents.
Zacks Rank: TransUnion's Zacks Rank #3, when combined with 0.00% ESP, makes surprise predictions difficult.
Note that we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Cytokinetics, Incorporated CYTK , with an Earnings ESP of +6.45% and a Zacks Rank #3.
Perrigo Company Public Limited Company. PRGO , with an Earnings ESP of +5.26% and a Zacks Rank #2.
Texas Roadhouse, Inc. TXRH , with an Earnings ESP of +3.33% and a Zacks Rank #3.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.