Equifax Earnings: Non-Mortgage Workforce Solutions Shining, Company’s Mortgage Outlook Conservative

Equifax reported a decent finish to 2023. Fourth-quarter revenue of $1.33 billion, adjusted EBITDA of $447 million, and adjusted EPS of $1.81 finished a bit above the FactSet consensus estimates of $1.31 billion, $445 million, and $1.74, respectively. Equifax’s 2024 outlook of $5.67 billion-$5.77 billion in revenue and $7.20-$7.50 adjusted EPS compares unfavorably with the respective consensus estimates of $5.75 billion and $8.13. However, we note that the firm’s outlook assumes a 16% decline in mortgage credit inquiries while the Mortgage Bankers Association, or MBA, expects a 17% increase in mortgage loan originations. Equifax does not assume mortgage rates will decline in 2024, while the MBA expects a decline of over 1 percentage point. In addition, we believe the firm’s mortgage business has high incremental margins, meaning that changes in mortgage volumes disproportionally impact profits. Overall, we will maintain our wide moat rating and $270 fair value estimate on Equifax’s shares.