Buy Equifax Ahead of Potential Earnings Beat and Solid Upside

Equifax Inc. EFX is a global data, analytics, and technology company providing information solutions and human resources business process outsourcing services for businesses, governments and consumers.

Equifax is set to report third-quarter 2024 earnings results on Oct. 16 after the closing bell. It has an Earnings ESP of +2.42% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #1, 2 or 3 (Hold) and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 

The stock price has advanced 17.3% year to date, lagging the broad-market index – S&P 500’s – rally of 22.8%.  

The chart below shows the price performance of EFX year to date.

Image Source: Zacks Investment Research

Factors That Should Drive EFX’s Q3 Results

Equifax plays a pivotal role in providing customers with credit information, analytical services and data to process multiple financial instruments. Strategic acquisitions have enabled EFX to offer comprehensive insights into customer behavior, financial status and market opportunities. 

EFX indicates a sustained revenue growth momentum and its diverse client base mitigates sector-centric challenges. The company operates through three segments: Workforce Solutions, U.S. Information Solutions (USIS), and International.

Analysts' assessment points toward 'Revenue- U.S. Information Solutions' reaching $463.14 million, up 8.7% from the year-ago quarter. According to the collective judgment of analysts, 'Revenue- Workforce Solutions' should come in at $625.10 million, an improvement of 8.3% from the prior-year quarter. The consensus among analysts is that 'Revenue- Total International' will reach $351.76 million, advancing 11.4% from the year-ago quarter.

EFX is a part of the Zacks defined Business Services sector. Other two major companies in this sector — Booz Allen Hamilton Holding Corp. BAH and Fiserv Inc. FI will report earnings results on Oct. 25 and Oct. 22, respectively. Each of these companies currently carries a Zacks Rank #2. 

Solid Earnings Estimate Revisions for EFX Shares

For third-quarter 2024, the Zacks Consensus Estimate currently shows revenues of $1.44 billion, suggesting an improvement of 9.5% year over year and earnings per share (EPS) of $1.84, indicating an appreciation of 4.6% year over year. The company reported positive earnings surprises in three out of the last four reported quarters with the average beat being 3.2%.   

Moreover, EFX has witnessed positive earnings estimate revisions for 2024 and 2025 in the last 30 days. At present, the Zacks Consensus Estimate indicates a year-over-year increase of 8.9% and 9.7%, respectively, for revenues and EPS in 2024. 

Despite this strong growth, the current Zacks Consensus Estimate for full-year 2025 revenues and EPS for EFX reflects an upside of 12% and 30.5%, respectively. In addition, EFX has a long-term (3-5 years) EPS growth rate of 19.1%, well above the S&P 500’s growth rate of 13.6%. 

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Strong Short-Term Price Upside for EFX Stock

The average short-term price target of brokerage firms represents an increase of 10.7% from the last closing price of $290.13. The brokerage target price is currently in the range of $271-$380. This indicates a maximum upside of 31% and a maximum downside of 6.5%.

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Equifax, Inc. (EFX): Free Stock Analysis Report
 
Booz Allen Hamilton Holding Corporation (BAH): Free Stock Analysis Report
 
Fiserv, Inc. (FI): Free Stock Analysis Report

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