Why is TransUnion (TRU) up 0.6% since its last earnings report?

It’s been a month since TransUnion’s (TRU) last earnings report. Shares rose about 0.6% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TransUnion headed for a recession? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

TransUnion beats second-quarter earnings estimates

TransUnion reported impressive second-quarter 2021 results, with earnings and revenues exceeding the Zacks Consensus Estimate.

Adjusted earnings per share of 96 cents beat the consensus estimate by 4.4% and increased 45.5% year over year. Total revenues of $774.2 million exceeded consensus by 3.3% and increased 22% year-over-year on a reported basis, 20% on a constant basis and 19% on an organic basis on a constant currency basis.

Revenue by segment

US revenues of $485 million increased 20% year-over-year on a reported basis and 18% on an organic basis. In this segment, financial services revenues of $271 million increased 22% year-over-year. Emerging industry revenues, including healthcare, insurance and all other industries, were $214 million, up 17% on a reported basis and 13% on an organic basis.

International revenue increased 44% year-over-year on a reported basis and 32% on a constant currency basis to $172 million. Canadian revenue increased 41% on a reported basis and 25% on a constant currency basis to $34 million. UK revenues were $53 million, up 36% on a reported basis and 20% on a constant currency basis. India revenues increased 58% on a reported basis and 54% on a constant currency basis to USD 28 million. Asia-Pacific revenues were $16 million, up 27% on both a reported and constant currency basis.

Latin America revenues increased 51% on a reported basis and 46% on a constant currency basis to $26 million. Revenues in Africa increased 69% on a reported basis and 37% on a constant currency basis to 15 million.

Consumer Interactive segment revenues increased 6% from the prior-year quarter to $137 million.

Operational efficiency

Adjusted EBITDA was $318.6 million, up 31% year over year on a reported basis, up 29% on a constant currency and organic constant currency basis. Adjusted EBITDA margin was 41.1%, up 290 basis points year-over-year.

Key balance sheet and cash flow data

At the end of the quarter, TransUnion had $526.2 million in cash and cash equivalents, compared to $433 million at the end of the prior quarter. Long-term debt was $3.3 billion, unchanged from the prior quarter. The company generated $265.7 million in cash from operations and CapEx was $53.9 million. It paid $18.3 million in dividends this quarter.

Perspectives

Third quarter 2021 revenue is expected to be between $766 million and $777 million. Adjusted earnings per share are expected to be in the range of 91 cents to 93 cents, above the current Zacks Estimate of 88 cents. Adjusted EBITDA is expected to be between $301 million and $308 million.

For 2021, the company expects revenue of $3.034 billion to $3.059 billion. Adjusted earnings per share are expected to be in the range of $3.63 to $3.70, above the Zacks Consensus Estimate of $3.59. Adjusted EBITDA is expected to be in the range of $1.207 billion to $1.225 billion.

How have estimates changed since then?

It turns out that estimate revisions have been trending upwards over the past month. As a result of these changes, the consensus estimate moved by 8.38%.

VGM results

Currently, TransUnion has an average growth score of C, a rating with the same momentum score. Plotting a somewhat similar path, the stock received a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. It’s no surprise that TransUnion has a Zacks Rank of #2 (Buy). We expect an above-average rate of return on shares in the coming months.

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