TransUnion Rides on Big Data Trends & Strong Business Model
TransUnion TRU stock has rallied a massive 64.7% over the past year, significantly outperforming the 23.1% gain of the industry it belongs to. The company has a strong business model, diversified revenue streams, significant operating leverage, low capital requirements, and strong and stable cash flows.
In the first quarter of 2018, TransUnion posted better-than-expected results backed by double-digit growth across all operating segments as well as the Tax Cuts and Jobs Act.
Adjusted earnings of 57 cents surpassed the Zacks Consensus Estimate by 6 cents and improved 36% year over year. Total revenues came in at $537 million, which outpaced the consensus mark by 6.1% and were up 18% (17% on a constant-currency basis).
Also, the company’s earnings surprise history has been impressive. It surpassed estimates in each of the trailing four quarters, with an average positive surprise of 6.2%. For the second quarter, the consensus estimate moved up 5.3% over the past 30 days.
Big Data and Analytics Market – A Big Opportunity
The Big Data and analytics market is expanding rapidly as companies comprehend the advantages of building an analytical enterprise, where decisions are derived from data and insights. Several underlying trends are supporting this market growth, including the creation of massive amounts of data; advances in technology and analytics that allow data to be processed more swiftly and efficiently; and growing demand for these business insights across industries and geographies.
Research firm IDC projects global spending on Big Data and analytics services will witness a projected compounded annual growth rate (CAGR) of 11.9% and will reach $210 billion in 2020. 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 PE Ratio (TTM)
50 Petabytes of Data – A Big Advantage
TransUnion’s huge treasure trove of data is its most distinguishing asset and also perhaps the biggest barrier for competitors. The company has over 50 petabytes of data, growing at an average of over 25% annually since 2010. Acquiring or building such data involves huge costs, making it extremely difficult for a new company to build the contacts and data that TransUnion already has. This fortifies TransUnion’s ability to sustain its competitive advantage and protect its market share.
Strong Business Model – A Big Strength
TransUnion’s strong business model allows it to serve a broad range of customers across multiple geographies and verticals. It has more than 65,000 businesses and millions of consumers. It deals with eight of the 10 largest U.S. banks, all of the top five credit card issuers, the biggest 25 auto lenders, fourteen of the fifteen largest auto insurance carriers and thousands of healthcare providers and federal, state and local government agencies. TransUnion keeps making significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. Thus, enabling the company to expand its business and improve its cost structure.
In the first quarter, the company also announced its agreement to buy Callcredit Information Group — the second largest and fast-growing consumer credit bureau in the U.K. This buyout should help TransUnion boost its international expansion strategy and contribute significantly to its long-term top- and bottom-line growth.
Zacks Rank & Other Stocks to Consider
TransUnion currently has a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the broader Business Services sector include CRA International CRAI, FTI Consulting FCN and NV5 Global NVEE, each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, CRA International, FTI Consulting and NV5 Global have delivered a positive earnings surprise of 41.7%, 31.9% and 10.3%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TransUnion (TRU): Free Stock Analysis Report
CRA International,Inc. (CRAI): Free Stock Analysis Report
FTI Consulting, Inc. (FCN): Free Stock Analysis Report
NV5 Global, Inc. (NVEE): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research