Analyst Note| Rajiv Bhatia, CFA |
Wide-moat rated Equifax continues to perform well with third-quarter financial results generally topping expectations. Equifax generated $404 million of adjusted EBITDA off revenue of $1.22 billion, which compares favorably with the FactSet consensus of $387 million and $1.18 billion, respectively. The $1.22 billion of revenue represents 14% year-over-year growth. Driving the revenue growth was a 35% increase in Workforce Solutions revenue. U.S. credit bureau revenue was flat while international credit bureau revenue increased 10% constant currency. We continue to view Workforce Solutions as a differentiated asset. With regard to 2022 expectations, Equifax came in above the Street on revenue but a touch below on earnings per share, which may explain some of the share price drop. That said, we continue to believe in the long-term potential of Workforce Solutions, and we are increasing our fair value estimate to $300 from $290 and view shares as modestly undervalued.