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Here's Why You Should Retain Equifax (EFX) in Your Portfolio

Equifax's (EFX) top line has been showing a decent growth rate over the past few years. However, a debt-laden balance sheet remains a concern.

This story originally appeared on Zacks

Equifax Inc. EFX has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. The company’s 2021 and 2022 earnings are expected to improve 9.2% and 15.8%, respectively, year over year.

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The stock has gained 49.8% in the past year against 19.4% decline of the industry it belongs to.

Equifax, Inc. Price and Consensus

What’s Behind the Rally?

Equifax serves a wide range of industries, such as financial, mortgage, consumer, employees, telecommunications, automotive, commercial, retail, government, resellers and others. This diversified client base is extremely beneficial as weakness in any sector can be balanced with strength in the others.

Equifax’s top line has shown decent growth rates in the last few years. Total revenues have witnessed a compounded annual growth rate (CAGR) of 5.6% in the last five years (2016-2020). Revenues improved 26.6% year over year in the first quarter of 2021. 

We believe synergies from acquisitions, in addition to continued general consumer credit activity, product innovation, initiatives to foster enterprise growth and efficient business executions, will continue to drive Equifax’s revenues over the long run.

Debt Woes Stay

Equifax’s total debt at the end of third-quarter 2021 was 4.96 billion, up from $3.28 billion at the end of the prior quarter. The company’s cash and cash equivalent of $2.03 billion at the end of the quarter was well below this debt level, underscoring the fact that the company does not have enough cash to meet this debt burden. Further, the cash level cannot even meet the short-term debt of $500.6 million.

Zacks Rank and Stocks to Consider

Equifax currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget CAR, Cross Country Healthcare, Inc. CCRN and CRA International, Inc. CRAI.

Avis Budget has an expected earnings growth rate of around 453.5% for the current year. CAR has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 478.6% in the past year. CAR has a long-term earnings growth of 18.8%. CAR sports a Zacks Rank #1.

Cross Country Healthcare has an expected earnings growth rate of around 500% for the current year. CCRN has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 168.6% in the past year. CCRN has a long-term earnings growth of 21.5%. CCRN carries a Zacks Rank #1.

CRA International has an expected earnings growth rate of around 61.2% for the current year. CRAI has a trailing four-quarter earnings surprise of 51%, on average.

CRA International’s shares have surged 77.9% in the past year. CRAI has a long-term earnings growth of 15.5%. The stock carries a Zacks Rank #2 (Buy).

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Equifax, Inc. (EFX): Free Stock Analysis Report


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