Research

EFX – Market expectations are for Uniform ROA expansion, but management has concerns about revenue declines, market weakness, and security

  • Equifax Inc. (EFX:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 25.4x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about revenue declines in their Employer Services and Global Consumer Solutions segments, weakness in Australian and Argentinian markets, and their technology’s security
  • Specifically, management may lack confidence in their ability to sustain Services growth, reverse declines in Employer Services and Global Consumer Solutions revenue, overcome weakness in Australian and Argentinian credit markets, and improve sales in Canada and Latin America. In addition, they may be concerned about increases in their capital spending, the profitability of their Mortgage Solutions 3-Bureau business, and the settlement of data-breach cases. Furthermore, they may be exaggerating their technology’s security and functionality, their consumer system’s ability to provide digital support, and their commitment to becoming a leader in data, analytics, and cloud-based technology.