Equifax Inc. (NYSE: EFX)
As a global data, analytics, and technology company, Equifax plays an essential role in the global economy by helping financial institutions, companies, employers, and government agencies make critical decisions with greater confidence. The company’s unique blend of differentiated data, analytics, and cloud technology drive insights to power decisions to move people forward. Headquartered in Atlanta and supported by more than 14,000 employees worldwide, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe, and the Asia Pacific region. Given its recent announcements about its plans and upcoming dividend, Equifax has seen an increase in mentions by 308% over the last day, encouraging investors to wonder if this is a good time to take a position in the company. Currently, shares of Equifax trade at $213.90.
There are numerous reasons for Equifax to gain positive hype, and here are some of them.
Equifax today announced financial results for the quarter and full year ending December 31, 2022. Full-year 2022 revenue grew 4% to $5.122 billion, offsetting the significant 23% mortgage revenue decline.
Equifax Board of Directors declared a quarterly dividend of $0.39 per share, payable on March 15, 2023, to shareholders of record as of the close of business on February 22, 2023. Equifax has paid cash dividends for more than 100 consecutive years.
The non-mortgage business, which was over 80% of Equifax in the fourth quarter, delivered very strong constant currency revenue growth of 12%, reflecting broad-based strength across our businesses.
Workforce Solutions, our largest and fastest-growing business, delivered another exceptional quarter with a very strong 17% Non-Mortgage growth.
USIS saw very strong Online non-mortgage growth of 19% and International had a strong quarter, finishing with constant dollar revenue growth of 9%.
Equifax is issuing its full-year 2023 guidance midpoint expectation of revenue of $5.325 billion, with strong Non-Mortgage growth of approximately 8% and Adjusted EPS of $7.20.
To respond to the declining mortgage market and uncertain economy, we are accelerating our data and technology Cloud transformation cost savings and executing broader proactive cost actions to deliver $200 million in spending reduction in 2023, including $120 million in expenses and $80 million in capital spending reductions.
Equifax maintains that it is energized about the ‘New Equifax’ and remains confident in our long-term 8-12% growth framework that will deliver higher margins and free cash flow.
Although Equifax has generated quite a bit of positive hype, it is not exempt from risks, and here are some of them.
Fourth quarter 2022 revenue of $1.198 billion was down 4% due to a 41% decline in mortgage revenue, which could be a sign of the start of a slowdown.
Additionally, the Fourth quarter 2022 diluted EPS attributable to Equifax was $0.88 per share, down from $0.99 per share in the fourth quarter of 2021. Net income attributable to Equifax of $108.2 million was down from $122.1 million in the fourth quarter of 2021.
There are expectations of a continued 30% decline in the U.S. mortgage market and an uncertain 2023 economic environment.
In the words of their CEO, Mark Begor, "We have strong momentum as we enter a more uncertain 2023 and are continuing to reinvest our outperformance in strategic bolt-on acquisitions that further position Equifax for diversified growth, including our offer to acquire Boa Vista Serviços, the second-largest credit bureau in Brazil, which will expand Equifax capabilities in the large and fast-growing Brazilian market and add to our diverse International portfolio.” Equifax is in a unique position to grow in the near future and has plans to buckle up and power through the potential setbacks it may face as well.
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