Earnings reports often have a way of sending share prices up, and Equifax (NYSE:EFX) recently proved as much wonderfully. After rolling out its earnings report, the company saw share prices increase as high as 14.9% at one point, and despite losses in premarket trading, the company has bounced back nicely this morning as of this writing. The numbers Equifax rolled out—which proved to be part of an ongoing pattern of success—weren't alone in helping to generate gains, though.
A Killer Earnings Report
Equifax turned in numbers that were solid by most any standard, and a very clear win for the credit reporting giant. The company turned in net income of $201.6 million for the quarter, working out to be $1.64 per share, and ultimately, $1.97 after adjustments took place. That not only beat the consensus out of FactSet that looked for $1.52, but also beat the figures turned in the same time last year of $0.95 per share.
The company also turned in $1.2 billion in straight sales, which not only marked an increase of 27% against the same time a year prior, but also represented the fifth consecutive quarter of growth—and double-digit growth at that—in the company. The $1.2 billion turned in also beats the FactSet consensus of $1.12 billion.
The numbers alone were impressive, and the company's CEO, Mark Bego, offered up a statement explaining the company's gains that proved to be every bit as impressive. Bego noted that the combination of the company's cash generating capabilities alongside the recent completion of five different “bolt-on acquisitions” helped drive the company's impressive numbers. The company's business-to-business operations in the US, exemplified by Workforce Solutions and USIS, turned in a combined total of 38%, Bego also noted. That was sufficient to actually outpace the mortgage market, which, given the last year or so of the mortgage market, was no mean feat.
Bego even noted that the company was sufficiently confident in its overall 2021 outlook to raise guidance, hiking full-year revenue to between $4.58 billion and $4.68 billion. Adjusted earnings were likewise hiked to between $6.75 and $7.05 per share.
Still a Winner With Analysts
Meanwhile, the broader analyst pool—as based on our latest research—is very much bullish on Equifax and has been since September of 2020. That was when the recommendation pool shifted from a consensus “hold” to a consensus “buy” rating.
Even a year ago, the consensus was fairly close to “buy”. The company had 10 “buy” ratings, seven “hold” and one “sell” to its credit. Six months ago, that shifted upward towards bullish as the “sell” rating departed altogether, leaving us with 10 “buy” and seven “hold”. Three months ago, a further shift—this time more bearish—kicked in as we went to eight “buy” and eight “hold”. Today, however, is much more bullish for Equifax, as we stand at eight “buy” and four “hold”.
The price target, meanwhile, occupies a disturbingly broad range, at last report. The current average is $188.73, with a high target of $260 and a low target of a seemingly impossible $8.50. Given that the company currently trades at $221.99, the odds of $8.50—held by CIBC back in January, at last report—coming up do not seem likely at all.
But Can It Continue?
It would be easy to say that, inevitably, all growth patterns stall. No company can grow infinitely; that just doesn't happen. That's enough to suggest that, the longer a growth pattern goes, the greater the likelihood that it will stop becomes. Even with that in mind, we have a good idea that the full-year guidance is looking sound and the company is working to keep up its growth patterns. It's fairly high-priced to look for further growth, but there's certainly something to be said for a company that so aggressively pursues it.
The old adage goes, that if you aim for the moon and miss, you'll wind up among the stars. That's not a bad fallback position, really. It's also important to note that the company has a quarterly dividend of about $0.39 per share, which it last paid back in March 2021. The company has kept that range up for quite some time, with a $0.39 dividend seen as far back as 2017.
Further growth from the company on any kind of large scale seems unlikely, but even if you miss the moon here, so to speak, you'll still wind up among the stars with a surprisingly well-protected dividend payer. There are certainly worse moves to make, and adding some Equifax to a portfolio might serve to help make a steady base from which to operate.
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