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TransUnion (TRU) Tops Q4 Earnings Estimates, 2018 View Solid

Zacks

TransUnion TRU reported strong fourth-quarter 2017 results with healthy year-over-year increase in revenues and earnings on the back of attractive new product launches, rapid vertical growth and solid performance in the international markets.

Adjusted earnings for the quarter were $94.8 million or 50 cents per share compared with $81.6 million or 44 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by a penny. The year-over-year increase in adjusted earnings was aided by a healthy rise in revenues despite higher operating expenses. The company reported adjusted earnings of $1.87 per share for full-year 2017.

Earnings Highlights

GAAP earnings for the reported quarter were $245.1 million or $1.29 per share compared with $49.5 million or 27 cents per share in the year-ago quarter. The surge was aided by benefits from the newly enacted tax law. GAAP earnings for 2017 were $2.32 per share compared with 65 cents in the prior year.

Total quarterly revenues came in at $506.1 million compared with $435.9 million in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $488 million. This healthy top-line growth was aided by strong year-over-year rise in revenues in each of the business segments.

The U.S. Information Services segment recorded revenues of $312 million, up from $268 million in the prior-year quarter. Substantial revenue increase in each of the sub-segments of Online Data Services, Marketing Services and Decision Services raised revenues for this segment. The acquisitions of Datalink, eBureau, and FactorTrust also boosted the top line.

Total revenues from the International segment increased to $96.3 million from $86.2 million in the year-earlier quarter. Double-digit revenue rise in both developed and emerging markets supported this segment.

Revenues from Consumer Interactive were $114.7 million compared with $97.1 million in the prior-year quarter aided by strong growth in both direct and indirect channels.

TransUnion Price, Consensus and EPS Surprise

Margins

Adjusted EBITDA was $196.3 million for the reported quarter, up 15.9% year over year. Adjusted EBITDA margin remained flat at 38.8% as revenues generated in the quarter from the one-time incremental credit monitoring business by the Consumer Interactive segment were reinvested in new data assets, marketing purposes and to extend its geographical footprint in South Africa.

Total adjusted operating income was $169.4 million compared with $146.5 million in the year-ago quarter, primarily due to top-line growth. Total adjusted operating margin contracted 10 basis points to 33.5% in the quarter.

Balance Sheet and Cash Flow

As of Dec 31, 2017, TransUnion had $115.8 million in cash and cash equivalents compared with $182.2 million in the prior-year period. Long-term debt was $2,345.3 million compared with $2,325.2 million a year ago. For 2017, the company generated $468 million in cash from operating activities compared with $389.9 million in 2016.

Moving Forward

Concurrent with the earnings release, TransUnion provided bullish 2018 outlook. For full-year 2018, revenues are likely to be between $2.12 billion and $2.14 billion, representing a 9-10% increase on a constant currency basis. Adjusted earnings per share are expected to be between $2.26 and $2.31, an increase of 20-23% year over year.

Zacks Rank & Stocks to Consider

TransUnion has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Envestnet, Inc. ENV, S&P Global Inc. SPGI and Intertek Group plc IKTSY each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Envestnet has an expected long-term earnings growth rate of 15%. It exceeded estimates in each of the trailing four quarters with an average beat of 4.2%.

S&P Global has an expected long-term earnings growth rate of 12.5%. It exceeded estimates in each of the trailing four quarters with an average beat of 12.8%.

Intertek has an expected long-term earnings growth rate of 12%.

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