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Equifax Inc EFX

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Morningstar’s Analysis

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Workforce Solutions, Including Non-Mortgage, Continues to Drive Profit Growth for Equifax

Rajiv Bhatia, CFA Equity Analyst

Analyst Note

| Rajiv Bhatia, CFA |

Wide-moat rated Equifax continues to perform well with third-quarter financial results generally topping expectations. Equifax generated $404 million of adjusted EBITDA off revenue of $1.22 billion, which compares favorably with the FactSet consensus of $387 million and $1.18 billion, respectively. The $1.22 billion of revenue represents 14% year-over-year growth. Driving the revenue growth was a 35% increase in Workforce Solutions revenue. U.S. credit bureau revenue was flat while international credit bureau revenue increased 10% constant currency. We continue to view Workforce Solutions as a differentiated asset. With regard to 2022 expectations, Equifax came in above the Street on revenue but a touch below on earnings per share, which may explain some of the share price drop. That said, we continue to believe in the long-term potential of Workforce Solutions, and we are increasing our fair value estimate to $300 from $290 and view shares as modestly undervalued.

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Company Profile

Business Description

Along with Experian and TransUnion, Equifax is one of the leading credit bureaus in the United States. Equifax’s credit reports provide credit histories on millions of consumers, and the firm's services are critical to lenders’ credit decisions. In addition, about a third of the firm’s revenue comes from workforce solutions, which provides income verification and employer human resources services. Equifax generates over 20% of its revenue from outside the United States.

1550 Peachtree Street N.W.
Atlanta, GA, 30309
T +1 404 885-8000
Sector Industrials
Industry Consulting Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Slow Growth
Employees 11,400