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Why Is TransUnion (TRU) Up 5.6% Since Last Earnings Report?

It has been about a month since the last earnings report for TransUnion (TRU). Shares have added about 5.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TransUnion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TransUnion Surpasses Q1 Earnings & Revenue Estimates

TransUnion reported solid first-quarter 2020 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of 73 cents per share outpaced the consensus mark by 7.4% and improved 21.7% year over year. The reported figure also exceeded the company’s guided range of 69-70 cents.

Total revenues of $688 million beat the consensus mark by 1% and increased 11% year over year on a reported basis, and 12% on a constant-currency, as well as organic constant-currency basis.

Adjusted revenues (excluding the impact of deferred revenue purchase accounting reductions and other adjustments to revenues for the company’s recently acquired entities) also came in at $688 million, up 10% year over year on a reported basis, and 11% at constant currency as well as organic constant currency. Also, the reported figure exceeded the company’s guided range of $681-$685 million.

TransUnion stated that in response to the COVID-19 pandemic, the company has shifted to a work-from-home model and is working closely with customers to bring new solutions based on their feedback and a changing market place.

The company’s president and CEO Chris Cartwright said, “As governments around the world implemented social distancing requirements, our business was negatively impacted and volumes declined sharply. Despite this, we still had sufficient momentum to deliver a good first quarter.”

Revenues Up Across Both Segments

The U.S. Market revenues of $422 million were up 14% year over year on a reported basis as well as on an organic basis. Within the segment, Financial Services revenues of $230 million climbed 22% year over year on a reported and organic basis. Emerging Vertical revenues, including Healthcare, Insurance and all other verticals, were $192 million, up 7% year over year on a reported basis and 5% on an organic basis.

International revenues rose 8% year over year on a reported basis and 12% on a constant-currency basis to $158 million. Adjusted revenues also came in at $158 million, up 5% year over year on a reported basis and 9% on a constant-currency basis.

Revenues from Canada increased 15% on a reported basis and 16% on a constant currency basis to $26 million. Revenues from the U.K. came in at $49 million, up 16% on a reported basis and 17% on a constant currency basis. India revenues jumped 11% on a reported basis and 14% on a constant currency basis to $31 million. Asia-Pacific revenues came in at $13 million, up 1% on a reported basis and marginally on a constant currency basis.

Revenues from Latin America decreased 4% on a reported basis and 6% on a constant currency basis to $24 million. Africa revenues were down 5% on a reported basis and 4% on a constant currency basis to 14 million.

Consumer Interactive segment revenues improved 3% from the prior-year quarter figure to $127 million.

Operating Performance Improves

Adjusted EBITDA was $263 million, up 10% year over year on a reported basis, and 11% on a constant-currency as well as organic constant-currency basis. Adjusted EBITDA margin came in at 38.3%, flat year over year.

Key Balance Sheet and Cash Flow Figures

TransUnion had $306 million in cash and cash equivalents at the end of the first quarter compared with the $274 million witnessed at the end of the prior quarter. Long-term debt was $3.6 billion, flat year on year. The company generated $126 million in cash from operating activities and CapEx was $42 million. It paid out $14.7 million in dividends in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -34.35% due to these changes.

VGM Scores

At this time, TransUnion has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TransUnion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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