TransUnion (TRU) Beats On Q3 Earnings, 2017 Guidance Up

TransUnion (NYSE:TRU) reported third-quarter 2017 adjusted earnings of 49 cents per share, beating the Zacks Consensus Estimate of 47 cents. Top-line growth, along with productivity improvement initiatives, drove the company’s profits.

The company generated GAAP net income of $68.8 million or 36 cents per share compared with $41.2 million or 22 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 $498 million compared with $437.6 million in the year-ago period. Revenues comfortably beat the Zacks Consensus Estimate of $474 million. Increase in revenues was driven by growth across the USIS and International segments.

Segmental Details

USIS segment’s revenues came in at $312 million, up 14% year over year. Decision Services revenues increased 18% year over year to $63 million, while Marketing Services revenues were up 17% to $48 million. Online Data Services revenues grew 12% year over year to $200 million.

International segment’s revenues rose 15% year over year to $95 million. On a constant currency basis, revenues grew 12%. Revenues from developed markets increased 16% (13% on a constant currency basis) to $34 million, while that from emerging markets went up 15% (12% on a constant currency basis) to $61 million.

Revenues at the Consumer Interactive segment came in at $107 million, up 10% year over year.

Margins

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $194.1 million compared with $166.6 million in the prior-year quarter. Adjusted EBITDA margin was 39% compared with 38.1% in the year-ago quarter.

The USIS segment’s adjusted operating income was $110 million, an increase of 22% from the prior-year quarter. The rise was driven by growth in the top line. The International segment’s adjusted operating income was $32 million, an increase of 20% (17% on a constant currency basis), driven by strong revenue growth. The Consumer Interactive segment’s adjusted operating was $48 million, an increase of 13% year over year.

Balance Sheet and Cash Flow

As of Sep 30, 2017, TransUnion had cash and cash equivalents of $253.3 million while long-term debt was $2,352.1 million. For the first nine months of the year, cash flow from operating activities was $348.9 million compared with $276.1 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 $1.91 billion to $1.92 billion (a year-over-year increase of 11% to 12% on constant currency basis), up from $1.87 billion to $1.88 billion expected earlier. Adjusted earnings per share are expected to be between $1.85 and $1.86 compared with earlier projections of $1.79–$1.82.

For the fourth quarter of 2017, consolidated revenues are expected to be in the range of $482−$487 million. Adjusted EBITDA is expected to be between $189 million and $191 million. Adjusted earnings per share are expected to be between 47 cents and 48 cents.

Zacks Rank & Key Picks

TransUnion currently holds a Zacks Rank #2 (Buy). Other stocks worth reckoning in the industry include Black Knight, Inc. (NYSE:BKI) , FactSet Research Systems Inc. (NYSE:FDS) and S&P Global, Inc. (NYSE:SPGI) , each carrying Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Black Knight has a long-term earnings growth expectation of 13.5%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 2.4%.

FactSet Research has a long-term earnings growth expectation of 10.8%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 1.1%.

S&P Global has a long-term earnings growth expectation of 12.5%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 11.1%.

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