TransUnion (TRU) Tops Q2 Earnings Estimates, Raises Guidance

TransUnion (NYSE:TRU) reported second-quarter 2017 adjusted earnings of 43 cents per share, beating the Zacks Consensus Estimate of 39 cents. Top-line growth, along with productivity improvement initiatives, drove the company’s profits.

TransUnion Price, Consensus and EPS Surprise

TransUnion Price, Consensus and EPS Surprise | TransUnion Quote

The company generated GAAP net income of $64.9 million or 34 cents per share compared with $17.3 million or 9 cents per share in the year-ago period. Strong growth momentum across the USIS and International segments led to the impressive bottom-line performance.

Revenues for the quarter increased to $474.8 million compared with $425.7 million in the year-ago period. Revenues comfortably beat the Zacks Consensus Estimate of $463 million. Increase in revenues was driven by growth across the USIS and International segments.

Segmental Details

USIS segment’s revenues came in at $298 million, up 16% year over year. Decision Services revenues increased 20% from the year-ago quarter to $61 million. Marketing Services revenues were $46 million, an increase of 23% from the prior-year quarter. Online Data Services revenues grew 13% year over year to $191 million.

International segment’s revenues rose 13% year over year to $87 million. On a constant currency basis, revenues grew an impressive 10%. Revenues from developed markets increased 11% (15% on a constant currency basis) to $31 million while that from emerging markets went up 13% (8% on a constant currency basis) to $56 million.

Revenues at the Consumer Interactive segment came in at $105 million, down 1% year over year.

Margins

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $186.1 million compared with $159.5 million in the prior-year quarter. Adjusted EBITDA margin was 39.2% compared with 37.5% in the year-ago quarter.

The USIS segment’s adjusted operating income was $110 million, an increase of 26% from the prior-year quarter. The rise was driven by growth in the top line. The International segment’s adjusted operating income was $27 million, an increase of 12% (11% on a constant currency basis), driven by strong revenue growth. The Consumer Interactive segment’s adjusted operating was $51 million, an increase of 13% year over year.

Balance Sheet and Cash Flow

As of Jun 30, 2017, TransUnion had cash and cash equivalents of $142 million while long-term debt was $2,297.3 million. For the first six months of the year, cash flow from operating activities was $174.2 million compared with $149.50 million in the year-earlier period.

Guidance Up

The company raised its full-year 2017 guidance. Consolidated revenues are currently expected to be in the range of $1.87 billion to $1.88 billion (a year-over-year increase of 8% to 9% on constant currency basis), up from $1.845 billion to $1.86 billion expected earlier). Adjusted earnings per share are expected to be between $1.79 and $1.82 compared with earlier projections of $1.74–$1.79.

For the third quarter of 2017, consolidated revenues are expected to be in the range of $470−$475 million. Adjusted EBITDA is expected to be between $185 million and $189 million. Adjusted earnings per share are expected to be between 45 cents and 46 cents.

Zacks Rank & Stocks to Consider

TransUnion currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Omnicom Group Inc. (NYSE:OMC) , Publicis Groupe S.A. (OTC:PUBGY) and WPP (LON:WPP) plc (NASDAQ:WPPGY) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicom has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 16.18x.

Publicis Groupe has a long-term earnings growth expectation of 12.9% and is currently trading at a forward P/E of 13.83x.

WPP plc has a long-term earnings growth expectation of 9.8% and is currently trading at a forward P/E of 12.69x.

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