We've been asking ourselves recently if the market has placed a fair valuation on TransUnion. Let's dive into some of the fundamental values of this Large-Cap Finance company to determine if there might be an opportunity here for value-minded investors.
TransUnion's Valuation Is in Line With Its Sector Averages:
TransUnion operates as a global consumer credit reporting agency that provides risk and information solutions. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 12.38 and an average price to book (P/B) ratio of 1.58. In contrast, TransUnion has a trailing 12 month P/E ratio of -76.3 and a P/B ratio of 3.91.
TransUnion's PEG ratio is 2.63, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Increasing Revenues but Narrowing Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,317 | $2,463 | $2,531 | $2,960 | $3,710 | $3,779 |
| Interest Income (M) | $138 | $174 | $126 | $113 | $231 | $285 |
| Operating Margins | 22% | 22% | 20% | 22% | 17% | 3% |
| Net Margins | 12% | 14% | 14% | 47% | 7% | -7% |
| Net Income (M) | $277 | $347 | $343 | $1,387 | $270 | -$247 |
| Depreciation & Amort. (M) | $307 | $339 | $347 | $377 | $519 | $521 |
| Diluted Shares (M) | 803 | 606 | 455 | 343 | 257 | 193 |
| Earnings Per Share | $0.34 | $0.57 | $0.75 | $4.04 | $1.05 | -$1.28 |
| EPS Growth | n/a | 67.65% | 31.58% | 438.67% | -74.01% | -221.9% |
| Avg. Price | $64.33 | $72.42 | $84.9 | $105.82 | $92.65 | $80.09 |
| P/E Ratio | 178.69 | 122.75 | 110.26 | 25.87 | 88.24 | -62.57 |
| CAPEX (M) | $180 | $188 | $206 | $224 | $298 | $319 |
| EV / EBITDA | 65.47 | 52.22 | 48.38 | 39.52 | 25.14 | 23.26 |
| Total Debt (M) | $4,120 | $3,716 | $3,510 | $6,480 | $5,785 | $115 |
| Net Debt / EBITDA | 4.8 | 3.91 | 3.56 | 4.53 | 4.52 | -0.47 |
| Current Ratio | 1.53 | 1.55 | 2.19 | 1.94 | 1.6 | 1.54 |
TransUnion has rapidly growing revenues and increasing reinvestment in the business, low leverage levels, and a decent current ratio of 1.54. However, the firm suffers from weak operating margins with a negative growth trend and declining EPS growth.
