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Here's Why You Should Retain Equifax (EFX) in Your Portfolio

Equifax Inc.’s EFX stock has had an impressive run on the bourse over the past year. Shares have gained 42.4%, significantly, outperforming the 16.6% rally of the industry it belongs to. The company has a long-term (three to five years) expected EPS growth rate of 14%.

What’s Behind the Rally?

Equifax serves a wide range of industries, such as financial, mortgage, consumer, employees, telecommunications, automotive, commercial, retail, government, resellers and others. This diversified client base is extremely beneficial, as weakness in any sector can be balanced with strength in the others.

The company’s top line has shown decent growth rates in the last few years. Total revenues have grown at a compounded annual growth rate (CAGR) of 5.6% in the last five years (2016-2020). Revenues improved 26.6% year over year in the first quarter of 2021. 

We believe synergies from acquisitions, in addition to continued general consumer credit activity, product innovation, initiatives to foster enterprise growth and efficient business executions, will continue to drive Equifax’s revenues over the long run.

Debt Woes Stay

Equifax’s cash and cash equivalent of $766 million at the end of the first quarter was well below the long-term debt level of $3.3 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level cannot even meet the short-term debt of $1.1 billion.

Zacks Rank and Stocks to Consider

Equifax currently carries a Zacks Rank #3 (Hold).

Investors interested in the broader Zacks Business Services sector can consider stocks like The Interpublic Group of Companies, Inc. IPGCross Country Healthcare CCRN and Charles River Associates CRAI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for The Interpublic Group of Companies, Cross Country Healthcare and Charles River is pegged at 10.2%, 10.5% and 15.5%, respectively.

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Charles River Associates (CRAI): Free Stock Analysis Report
 
Interpublic Group of Companies, Inc. The (IPG): Free Stock Analysis Report
 
Equifax, Inc. (EFX): Free Stock Analysis Report
 
Cross Country Healthcare, Inc. (CCRN): Free Stock Analysis Report
 
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