TransUnion (TRU) Poised To Grow In The Big Data Market

On May 31, we updated the research report on business information service provider TransUnion (NYSE:TRU) .

Headquartered in Chicago, IL, TransUnion is a consumer information services company that offers data and analytics solutions, particularly in credit risk management. The company is one of the three largest credit reporting agencies in the U.S., with the other two being Experian and Equifax Inc (NYSE:EFX). TransUnion’s distinctive and comprehensive datasets, next-generation technology and its analytics and decision-making capabilities, which enable it to deliver insights across the complete consumer lifecycle, set it apart from its peers. The company boasts rich domain proficiency across a wide range of industry verticals, including insurance, healthcare and financial services. It also caters to verticals like wireless, real estate and general commercial/business information.

The company’s addressable market includes the burgeoning Big Data and analytics market, which is expanding at a rapidly accelerating pace as companies realize the advantages of building an analytical enterprise where decisions are derived from data and insights. Numerous underlying trends are supporting this market growth. These include the creation of massive amounts of data, advances in technology and analytics that allow data to be processed more swiftly and efficiently, and mounting demand for these business insights across industries and geographies. Research firm IDC projects that global spending on Big Data and analytics services will grow at a compounded annual growth rate (“CAGR”) of 11.7%, and will reach $203 billion in 2020 from $130 billion in 2016. In order to capitalize on the immense potential growth in this market, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and has further expanded its database.

TransUnion has outperformed the Zacks categorized Business - Information Services industry in the last three months, with an average return of 13.2% compared with a gain of 2.1% for the latter. As emerging market economies continue to develop and mature, the company is well-positioned to gain from the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion’s consumer solutions. On the other hand, businesses are also seeing increasingly complex regulations, such as new capital requirements and the Dodd-Frank Act, which boosts demand for TransUnion’s services.

However, its revenues are considerably influenced by the overall macroeconomic conditions, such as interest rates, employment levels, consumer confidence, accessibility of affordable credit and capital, inflation and housing demand. Economic recovery has been fragile so far, and consequently, consumer spending growth has been limited. This continues to exert pressure on TransUnion’s growth. The company’s revenues are also significantly affected by industry trends, including the demand for information services in insurance, financial services and healthcare industry. Adverse developments in the debt, consumer credit and financial services markets could hamper the company’s growth.

On a P/E (TTM) basis, TransUnion looks a bit overvalued compared with the benchmark S&P 500 index with respective tallies of 29.3x and 20.2x in the last three-month period. The stock is also currently trading near the higher range of this period. This forces us to be somewhat cautious on the stock.

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

Stocks to Consider

Some better-ranked stocks in the industry include S&P Global, Inc. (NYSE:SPGI) , Gartner, Inc. (NYSE:IT) and National Research Corporation (NASDAQ:NRCIA) . S&P Global and Gartner carry a Zacks Rank #2 (Buy), while National Research Corporation sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

S&P Global has a solid long-term earnings growth expectation of 12.3%.

Gartner has a healthy long-term earnings growth expectation of 17.3%

National Research Corporation delivered a positive earnings surprise of 4.37% in the trailing four quarters.

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