What You Need to Know About Equifax (EFX)

Equifax has moved -2.0% Friday, and is now selling at a price of $225.99 per share. In contrast, the S&P 500 index moved -1.1%. Read below for a basic value analysis of Equifax.

Equifax shares moved -3.5% over the last 52 weeks, with a high of $243.79 and a low of $145.98. During this time, the stock outperformed the S&P 500 index by 4.3%. As of January 2022, the company's 50-day average price is $205.0. Equifax Inc. provides information solutions and human resources business process automation outsourcing services for businesses, governments, and consumers. The large-cap credit reporting company has 12,700 full time employees and is based in Atlanta, GA. Equifax has returned a 0.7% dividend yield over the last 12 months.

The Company Is Highly Leveraged:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $3,508 $4,128 $4,924
Revenue Growth n/a 17.67% 19.29%
Gross Margins 56.6% 57.9% 59.8%
Gross Margins Growth n/a 2.3% 3.28%
Operating Margins -9.6% 16.4% 23.1%
Operating Margins Growth n/a 270.83% 40.85%
Earnings Per Share -$3.3 $4.24 $6.02
EPS Growth n/a 228.48% 41.98%
Free Cash Flow (MM) -$86 $525 $866
FCF Growth n/a 711.77% 64.95%
Capital Expenditures (MM) -$400 -$421 -$469
Net Debt / EBITDA 186.33 2.2 3.2

Equifax Is Overpriced:

Compared to the Industrials sector's average of 21.46, Equifax has a trailing twelve month P/E ratio of 39.3 and, according to its EPS guidance of 7.56, an expected P/E ratio of 29.9. Equifax's PEG ratio is 0.4 based on its 98.67% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Equifax's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 3.01, which suggests that the company's shares are actually overvalued.

Equifax's P/B ratio is 7.4 compared to its sector average of 3.7. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 464.4% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 2.32 * 30.711) = $40.04

Equifax Is the Subject of Mixed Market Indicators:

18 analysts are following Equifax and have set target prices ranging from $150 to $235 per share. On average, they have given the company a rating of buy. At the current price of $225.99, EFX is trading 8.65% away from its average analyst target price of $208 per share, implying an analyst consensus of little upside potential for the stock.

The company has an average amount of shares sold short since 4.3% of the company's shares are tied to short positions. Institutions own 96.1% of Equifax's shares, while the insider ownership rate stands at 0.4%. The biggest shareholder is the Vanguard Group, Inc. with a 11% stake in the company worth approximately $3,013,573,785.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.