Company Overview: Equifax Inc. is a global provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates in four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Global Consumer Solutions. Its products and services are based on databases of consumer and business information derived from various sources, including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. It uses statistical techniques and software tools to analyze all available data, creating customized insights, decision-making solutions and processing services for its clients. It helps consumers understand, manage and protect their personal information and make more informed financial decisions. The Company also provides information, technology and services to support debt collections and recovery management.


EFX Details

Unveiled New Analytic Dataset for Identifying Detailed Credit Market Signals: Global information solutions company, Equifax Inc. (NYSE: EFX), launched a new Analytic Dataset, which is a new analytic tool that provides borrower-level data in an anonymous and non-aggregated format. The dataset gives key information for researchers and modelers such as credit risk scores, geography, debt balances and delinquency status at the loan level for all types of consumer loan obligations and asset classes. The investors and other market participants will use the new Analytic Dataset to better model delinquency, default, loss severity and prepayment, as well as the ability to more accurately value securities and understand broader consumer credit trends. Asset Backed Securities (ABS) and Mortgage Backed Securities (MBS) investors, issuers, traders, and ratings agencies researchers can use this new tool or solution to analyze and model consumer payment performance across a variety of asset classes such as auto, credit card, mortgage and unsecured personal loans. Better modeling gives the investors better predictive power to price risk and thus finance consumer debt at the best possible rates. Moreover, the new solution Analytic Dataset has been created from an unbiased ten percent statistical sample of the U.S. credit population across all geographic boundaries, with historic data starting in 2005. This tool provides insights into the credit health and payment performance of U.S. consumers over time and across various economic cycles. Additionally, the businesses or government entities can apply segmentation and perform analytics by credit quality or asset class by using this tool; and can better determine important factors such as how consumers prioritize payments and the impact of behaviors of given loan types on other forms of credit.
 

Competencies across Business Model (Source: Company Reports)
 
Launch of Lock & Alert: EFX has launched Lock & Alert, which is a new service that enables the consumers to quickly lock and unlock their Equifax credit report. This can be done using a computer or app downloaded on their mobile device from either the Apple App Store or Google Play store. U.S. consumers who are 18 years or older and have an Equifax credit report can enroll to this service, which is available for free, for life. Once a consumer has enrolled in the service, EFX will send an alert each time he or she locks or unlocks their Equifax credit report. Lock & Alert is an Equifax-only service, and consumers should contact the other two major credit bureaus should they wish to lock or freeze their credit reports with those bureaus. Moreover, the new Lock & Alert service is similar to a security freeze as it restricts certain access to a consumer’s Equifax credit report for purposes of opening new credit, but Lock & Alert uses usernames and passwords, as well as mobile app technology. This service also has no associated fees.

Integration of Entersekt's digital security system: EFX and Entersekt have inked a partnership under which EFX has licensed Entersekt's product Transakt to serve as an additional layer of security protecting the Equifax online and mobile services. Entersekt’s market leading offering enables EFX to expand the trusted services to various new digital channels.

Mixed third Quarter 2017 Financial Performance: EFX in the third quarter 2017 has reported the revenue of $834.8 million, which is a 4 percent rise compared to the third quarter of 2016 on a reported basis and 3 percent rise on a local currency basis. However, the third quarter diluted earnings per share attributable to EFX were $0.79, down 28 percent compared to the third quarter of 2016. The net income attributable to EFX was $96.3 million and this was down 27 percent compared to the third quarter of 2016. On the other hand, the adjusted EBITDA margin was 37.4 percent, compared to 35.9 percent in the third quarter of 2016. For USIS in the third quarter 2017, the total revenue was $307.7 million compared to $317.4 million in the third quarter of 2016, which is a fall of 3 percent. The operating margin for USIS was 42.1 percent in the third quarter of 2017 compared to 44.0 percent in the third quarter of 2016. The adjusted EBITDA margin for USIS was 49.2 percent in the third quarter of 2017 compared to 50.6 percent in the third quarter of 2016. Online Information Solutions revenue fell 4 percent to $221.0 million. Mortgage Solutions revenue fell 2 percent to $38.8 million. Financial Marketing Services revenue fell 1 percent to $47.9 million.

Solid international performance: For International segment, the total revenue grew 12 percent to $239.8 million and 10 percent on a local currency basis. The operating margin for International was 22.0 percent in the third quarter of 2017, compared to 12.3 percent in the third quarter of 2016. The adjusted EBITDA margin for International was 33.2 percent in the third quarter of 2017, compared to 28.4 percent in the third quarter of 2016. Asia Pacific revenue grew 10 percent to $81.2 million. Europe revenue grew 11 percent to $69.0 million. Latin America revenue grew 16 percent to $54.5 million and Canada revenue grew 11 percent to $35.1 million.

Improving performance of Workforce Solutions: For Workforce Solutions, the company has reported the total revenue of $186.4 million in the third quarter of 2017, which is a 9 percent increase compared to the third quarter of 2016. Operating margin for Workforce Solutions was 43.1 percent in the third quarter of 2017 compared to 40.8 percent in the third quarter of 2016. The adjusted EBITDA margin for Workforce Solutions was 48.6 percent in the third quarter of 2017 compared to 47.0 percent in the third quarter of 2016. Verification Services revenue grew 13 percent to $129.9 million. However, Employer Services revenue of $56.5 million was flat compared to the third quarter of 2016. Additionally, for Global Consumer Solutions, the company in the third quarter has posted the revenue of $100.9 million, flat compared to the third quarter of 2016 and flat on a local currency basis. The operating margin was 24.5 percent compared to 27.6 percent in the third quarter of 2016. Adjusted EBITDA margin was 27.9 percent compared to 30.0 percent in the third quarter of 2016.
 

Efforts on different fronts (Source: Company Reports)
 
Appointed New Chief Information Security Officer: EFX has appointed Jamil Farshchi, as its Chief Information Security Officer (CISO). Farshchi had previously served as CISO at The Home Depot; and will assume company-wide leadership of work already underway to transform the company's information security program, and will collaborate with the industry to share best practices on information security. 
 

Global Presence (Source: Company Reports)
 
Stock Recommendation: The shares of EFX fell over 13.8 percent in the last twelve months as on February 28, 2018 impacted by concerns over data breach and the group’s ability to protecting personal data of millions of consumers. On the other hand, to combat the pressure of this situation, the group is taking major actions to protect the consumer and commercial data including revisiting their entire IT and data security practice, including engaging industry experts to support the effort. They made a thorough top-down review with Megan and PwC, to enhance their data security infrastructure. The group is changing the procedures to require close-looped confirmation when software patches are applied, rolling out new vulnerability scanning tools and processes and increasing accountability mechanisms for their security and IT team members. Along with PwC, the group is taking steps, including strategic remediation and transformation initiative that would help them identify and implement solutions in the future. Further, new tools are expected to place the group at a better position while the stock proffers a high risk high reward scenario. There may be short-term hurdles while the company has tremendous potential and can transform its security program into one of the most advanced and recognized one at the global level. We believe investors can leverage the low levels of the stock price as an entry opportunity, and accordingly we rate a “Buy” at the current price of $113.00, in conjunction with its Q4 result due for release on March 01, 2018 after the market close.
 

EFX Daily Chart (Source: Thomson Reuters)

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