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Equifax (EFX) Down 5.8% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Equifax (EFX). Shares have lost about 5.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Equifax due for a breakout? 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.

Equifax Tops Q1 Earnings & Revenue Estimates

Equifax reported better-than-expected first-quarter 2022 results.

Adjusted earnings of $2.22 per share beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. The reported figure exceeded the guided range of $2.08-$2.18.

Revenues of $1.36 billion outpaced the consensus estimate by 2.4% and improved 12.4% year over year on a reported basis and 13% on a local-currency basis. The reported figure exceeded the guided range of $1.32-$1.34 billion.

Segmental Revenues

Revenues in the USIS division came in at $432.9 million, down 6% from the year-ago quarter. Within the division, Online Information Solutions’ revenues of $343.8 million were down 2% from the year-ago quarter. Mortgage Solutions’ revenues of $43.4million declined 20% year over year. Financial Marketing Services’ revenues came in at $45.7 million, down 14% year over year.

Revenues in the International division totaled $281.3 million, up 6% year over year on a reported basis and 10% on a local-currency basis. Asia Pacific revenues of $86.5 million fell 1% year over year on a reported basis but grew 6% on a local-currency basis. Revenues from Europe came in at $85.8 million, up 11% year over year on a reported basis and 16% on a local-currency basis. Latin Americarevenues of $47.4 million grew 14% year over year on a reported basis and 23% on a local-currency basis. Canadarevenues of $61.6 million grew 1% year over year on a reported basis and 2% on a local-currency basis.

Revenues in the Workforce Solutions segment totaled $649 million, up 33% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $513.3 million were up 33% year over year. Employer Services revenues of $135.7 million grew 33% year over year.

Operating Results

Adjusted EBITDA in the first quarter of 2022 came in at $484.2 million, up 12% from the year-ago quarter. Adjusted EBITDA margin fell to 35.5% from 35.6% in the year-ago quarter.

Adjusted EBITDA margin for USIS was 39.3% compared with 42.1% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 25.4% compared with 26.9% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 54.6% compared with 58.9% a year ago.

Balance Sheet and Cash Flow

Equifax exited first-quarter 2022 with cash and cash equivalents of $200.9 million compared with $224.7 million at the end of the prior quarter. Long-term debt of $4.47 billion was flat sequentially.

The company utilized $198.5 million of cash from operating activities while capex was $156.5 million. Also, Equifax paid out dividends of $47.9 million to shareholders in the reported quarter.

Second-Quarter and Full-Year 2022 Guidance

For the second quarter of 2022, Equifax expects revenues between $1.31 and $1.33 billion. Adjusted EPS is anticipated in the range of $1.98-$2.08.

For full-year 2022, revenues are now expected between $5.15 billion and $5.25 billion compared with the prior guidance of $5.25-$5.35 billion. Adjusted EPS is now anticipated in the range of $8.00-$8.30 compared with the prior guidance of $8.50-$8.80.

 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -5.93% due to these changes.

VGM Scores

Currently, Equifax has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Equifax has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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