Equifax Inc.

EFX Details

EFX Promotes Lisa M. Nelson as President: Equifax Inc. (NYSE: EFX) is engaged in providing information solutions and human resources business process outsourcing facilities for governments, businesses, and consumers. On 23 May 2021, the company informed the market that it has elevated Lisa M. Nelson as a president of Equifax International.

EFX Joints Hand with Ethoca: On May 6, 2021, Equifax Inc.’s company, Kount, informed the market regarding a brand-new joint offering of two best products from Ethoca. The two award-winner products, namely Ethoca Alerts and Consumer Clarity™ are being distributed as part of the Kount Dispute and Chargeback Management Solution to deliver enhanced end-to-end chargeback protection.

Declaration of Dividend: On May 6, 2021, EFX declared a quarterly cash dividend of 39 cents per share, with a payment date of June 15, 2021 and with a record date of May 25, 2021.

1QFY21 Operational Highlights for the Period ended 31 March 2021:  EFX announced its quarterly results, wherein the company reported total revenues of $1.21 billion, depicting an increase of ~26.6% year over year.  Adjusted earnings per share came in at $1.97 and increased 37% on a year-over-year basis. The company marked 5^th successive quarter of strong revenue growth, owing to strength across its Workforce Solutions and U.S. Information Solutions (“USIS”) segments. Equifax exited the quarter with a cash balance of $765.9 million and long-term debt of $3.38 billion.

Revenues Highlight; Analysis by Kalkine Group

Key Risks: The company is exposed to the risks related to the magnitude and duration of the COVID-19 pandemic and its effects. Further, disruption in the supply chain and a leveraged balance sheet adds to the woes.

Outlook: For FY21, the company now expects revenues to be in the range of $4.58 billion-$4.68 billion, up from the prior view of $4.35-$4.45 billion. The company now predicts adjusted EPS to be in the range of $6.75 and $7.05 (previous guided range was $6.20-$6.50).

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: Over the last six months, the stock has provided a return of ~33.88% and currently trading near the 52-week’s high price of $242.13. On the technical analysis front, the stock has a support level of ~$212.56 and resistance of ~$242.74. We have valued the stock using the P/E multiple based illustrative relative valuation method and arrived at a target price with a correction of high single-digit (in % terms). We believe that the company can trade at a slight premium to its peer average, increase in top and bottom line in 1QFY21, encourage FY21 outlook, strategic alliances, and enhancing shareholder’s value. We have taken peers like Factset Research Systems Inc (NYSE: FDS), Verisk Analytics Inc (NASDAQ: VRSK), etc. Considering the company’s decent returns in the last months, current trading level, and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $228.72, down by ~2.01% as on 7 June 2021.

EFX Daily Technical Chart, Data Source: REFINITIV

Expedia Group, Inc.

EXPE Details

Managerial Changes: Expedia Group, Inc. (NASDAQ: EXPE) is an online travel company that has its own travel platform and seeks to offer travel details and travel-related services to the consumers. On 24 May 2021, the company appointed Rathi Murthy as its Chief Technology Officer and President of Expedia Services. Also, the company announced the appointment of Jon Gieselman as the President of Expedia Brands. 

1QFY21 Key Financial Highlights:  During the quarter, the company reported revenue of $1.25 billion, down 44% year over year, owing to continuous disruptions led by the virus outbreak on the travel industry. Adjusted EBITDA loss in 1QFY21 stood at $58 million, compared with a loss of $76 million reported in 1QFY20. The company exited the quarter with cash balance of $4.3 billion, as compared to $3.4 billion as of 31 December 2020. As at 31 March 2021, long-term debt stood at $8.5 billion. Cash flow from operations in 1QFY21 came in at $2.2 billion, whereas free cash flow stood at $2 billion.

Revenues Highlight; Analysis by Kalkine Group

EXPE Enter into a Sale Agreement with GBT: On 4 May 2021, EXPE announced that it has received a binding offer from American Express Global Business Travel (GBT) to purchase Expedia Group’s corporate travel arm, Egencia. Per the deal, Expedia Group is likely to become a shareholder in GBT. The move will provide a broad-based technology and customer solutions across each segment of business travel.

Key Risks: On the flip side, sluggish travel trends due to the pandemic along with EXPE’s weaker-than-expected performance from trivago segment is likely to impact the top-line growth, going forward.

Outlook: The company remains on track to benefit from its expanding worldwide lodging portfolio and its efforts to strengthen its foothold in the domestic regions. Moreover, strong cost-cutting implementation is likely to aid the company in offsetting the coronavirus-led disruptions.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: Over the last six months, the stock has provided a return of ~34.64% and currently trading near the 52-week’s high price of $187.93. On the technical analysis front, the stock has a support level of ~$146.78 and resistance of ~$185.38. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with a correction of high single-digit (in % terms). We believe that the company can trade at a slight premium to its peer average, considering increase in cash balance as at 31 March 2021, decent outlook, cost-cutting initiatives and positive cash flow. We have taken peers like Amazon.com Inc (NASDAQ: AMZN), Tripadvisor Inc (NASDAQ: TRIP), etc. Considering the company’s decent returns in the last six months, current trading level, and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $170.35, down by ~0.62% as on 7 June 2021.

EXPE Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.