Why Is TransUnion (TRU) Up 2% Since Last Earnings Report?

It has been about a month since the last earnings report for TransUnion (TRU). Shares have added about 2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TransUnion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TransUnion's Q4 Earnings and Revenues Beat Estimates

TransUnion reported impressive fourth-quarter 2023 results wherein earnings and revenues beat the Zacks Consensus Estimate.

Quarterly adjusted earnings of 70 cents per share (adjusting 67 cents from non-recurring items) surpassed the consensus mark by 14.8% and ended flat on a year-over-year basis. Total revenues of $954.3 million surpassed the consensus mark by 3% and increased 5.8% year over year on a reported basis. Revenues were up 5% on a constant-currency basis, mainly driven by strength in international markets.

Revenues by Segments

The U.S. Markets segment’s revenues of $608 million were up 3% year over year and surpassed our estimate of $580.3 million. Within the segment, Financial Services’ revenues of $305 million showed an increase of 3% year over year. Emerging Vertical revenues were $303 million, up 2% on a reported basis.

The International segment’s revenues increased 14% year over year on a reported basis and 13% on a constant-currency basis to $215 million and surpassed our estimate by 10.5%. Revenues from Canada increased 14% year over year on a reported basis and 14% year over year on a constant-currency basis to $36 million, beating our estimate of $34.4 million.

Revenues from India increased 28% on a reported basis and 30% on a constant-currency basis to $57 million and beat our estimated $56.3 million. Revenues from Asia-Pacific were $23 million, up 14% on a reported basis and 13% on a constant-currency basis, but lagging our estimate of $24.1 million.

Revenues from Latin America increased 13% on a reported basis and 5% on a constant-currency basis to $31 million and missed our estimated $31.3 million. Revenues from Africa increased 3% on a reported basis and 12% on a constant-currency basis to $16 million, missing our estimated $15.5 million. Revenues from the UK were $51 million, up 3% on a reported basis and down 4% on a constant-currency basis.

The Consumer Interactive segment’s revenues of $150 million gained 7% year over year on a reported basis and beat our estimate by 9.3%.

Operating Performance

Adjusted EBITDA was $326 million, indicating an increase of 1% year over year on a reported basis and 1% on a constant-currency basis and beating our estimate by 4.8%. The adjusted EBITDA margin was 34%, 200 basis points lower than the year-ago figure.

Balance Sheet and Cash Flow

TransUnion had $479.9 million in cash and cash equivalents at the end of the quarter compared with $420.9 million at the end of the prior quarter. Long-term debt was $5.25 billion compared with the previous quarter.

Cash generated from operating activities during the quarter was $205.5 million. Capital expenditure was $97.5 million.

Outlook

For the first quarter of 2024, TransUnion expects revenues between $971 million and $980 million. The company anticipates adjusted earnings per share (EPS) to be 79-81 cents for the first quarter of 2024. Adjusted EBITDA is anticipated to be between $324 million and $331 million.

For 2024, TransUnion expects revenues to be between $3.96 billion and $4.02 billion. The company anticipates adjusted EPS to be $3.57 to $3.74 for the first quarter of 2024. Adjusted EBITDA is anticipated to be between $1.39 billion and $1.44 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, TransUnion has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TransUnion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

TransUnion belongs to the Zacks Business - Information Services industry. Another stock from the same industry, S&P Global (SPGI), has gained 1.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.

S&P Global reported revenues of $3.15 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $3.13 for the same period compares with $2.54 a year ago.

S&P Global is expected to post earnings of $3.45 per share for the current quarter, representing a year-over-year change of +9.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

S&P Global has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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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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