Equifax Posts a Decent 3Q - Analyst Blog
31 Outubro 2011 - 9:15AM
Zacks
Equifax Inc. (EFX)
has posted third quarter 2011 adjusted earnings per share (EPS) of
65 cents, inching past the Zacks Consensus Estimate by a penny. The
quarter’s results were up 8.3% from 56 cents reported in the
year-ago quarter. The adjusted EPS excludes acquisition-related
amortization expense.
Revenue
Revenue grew 3.5% year over year to
$490.4 million. The upside could be attributed to top-line growth
across the board, partially offset by lackluster performance from
the International segment.
Segment wise, total U.S. Consumer
Information Solutions (USCIS) revenue was $202.0 million, compared
with $194.0 million in the year-earlier quarter. Among
sub-segments, strong growth was noticed in Online Consumer
Information Solutions, followed by Consumer Financial Marketing
Services. However, the overall growth was rationalized by a flat
year-over-year growth in Mortgage Solutions Services.
Total International (including
Europe, Canada and Latin America) revenue slid 3.2% year over year
to $118.6 million. Of this, Latin America decreased 24.0%, Europe
grew 16.0%, and the Canada Consumer segment climbed 16.0% in U.S.
dollar terms.
Revenue from the TALX segment
increased 4.0% year over year to $102.8 million. The upside
resulted from a 4.0% year-over-year increase in both Tax &
Talent Management Services revenue and Work Number revenue.
North American Personal Solutions
contributed $45.5 million, reflecting a 14.0% year-over-year
improvement. North American Commercial Solutions brought in $21.5
million, up 16.0% from the year-ago quarter.
Operating
Results
Gross margin in the third quarter
was 61.4%, up from 60.3% in the year-ago quarter. Operating margin
was 24.8% as against 23.3% a year ago. The margin performance was
strong in North America Personal Solutions and North America
Commercial Solutions, moderate in USCIS, TALX and
International.
The company reported higher
operating expenses with selling, general and administrative
expenditure increasing 3.9% year over year, partially offset by a
2.2% decline in depreciation and amortization expenses.
On a GAAP basis, net income from
continuing operations was $66.7 million or 54 cents per share
versus $61.3 million or 49 cents per share in the comparable
quarter last year. Excluding the impact of acquisition-related
amortization expense (net of tax), adjusted net income was $80.5
million or 65 cents per share, compared with $75.7 million or 60
cents per share in the year-ago quarter.
Balance Sheet, Cash Flow
& Share Repurchase
Equifax exited the quarter with
$102.0 million in cash and cash equivalents, down from $108.7
million in the previous quarter. Accounts receivable were $275.8
million. Total long-term debt was $1.04 billion, up from $981.5
million in the prior quarter. Cash provided by operating activities
was $112.0 million, compared with $123.9 million in the prior
quarter.
The company bought back 1.4 million
of its common shares for $43.9 million during the quarter. At
September 30, 2011, remaining authorization for future share
repurchases was $179.3 million.
Guidance
For the fourth quarter of 2011,
Equifax expects revenue to be up 8.0% to 10.0% from the year-ago
quarter, based on contributions from domestic and international
businesses and ongoing foreign exchange rates. Excluding the impact
of acquisition-related amortization expense, Equifax expects
adjusted earnings per share to range between 65 cents and 68 cents.
The Zacks Consensus Estimate for the third quarter is 68 cents,
which is at the higher end of the company’s guidance.
Our Take
We are not very excited about the
company’s third quarter performance, which just about matched the
Zacks Consensus Estimate on the bottom line. But we are optimistic
about revenue growth prospects and improving margins through the
remainder of the year.
Management’s commentary regarding
strategic initiatives around new product innovations, broadening
data assets through acquisitions and continuous share gains in
North America were encouraging.
However, given the company’s strong
correlation to consumer and financial markets, as well as its U.S.
exposure, we see a gradual improvement in results. But stiff
competition from Automatic Data Processing Inc.
(ADP) is a concern.
Currently, Equifax has a Zacks #3
Rank implying a short-term Hold rating.
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EQUIFAX INC (EFX): Free Stock Analysis Report
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