Equifax (EFX) To Post Q4 Earnings: Disappointment In Store?
Zacks Investment Research | Feb 11, 2018 09:02PM ET
Equifax Inc. (NYSE:EFX) is expected to report fourth-quarter 2017 results this week. The question lingering in investors’ minds is whether this credit information providing company will be able to post a positive earnings surprise in the to-be-reported quarter.
Last quarter, the company posted a positive earnings surprise of 2.7%. Notably, Equifax outperformed the Zacks Consensus Estimate in each of the trailing four quarters with an average positive earnings surprise of 2.4%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
We believe last year’s data breach will continue to hurt Equifax’s fourth quarter’s financial results. Notably, in September 2017, the company announced that very sensitive personal data of approximately 143 million consumers has been stolen from its database.
Since then, the brand image and creditability of Equifax has been in question and has been facing huge customer criticism, while cybersecurity companies are questioning the company’s preparedness and response to the massive data breach. Moreover, with lawmakers and investigating agencies probing the mishap, its troubles are unlikely to end any time soon.
We believe the entire issue might result in loss of customers and the company will also have to make huge compensation to its clients. This will have an adverse impact on the company’s financial performance in the near term.
It should be noted that in third-quarter 2017 the company had witnessed the slowest revenue growth rate in the last several years. This was mainly due to the dismal performance at its U.S. Information Solutions (USIS) division which registered a year-over-year 3% decline in revenues to $307.7 million, reflecting massive impact due to the data-breach scandal.
Furthermore, escalating expenses related to the cyber attack will remain a drag on the company’s profitability. Per its 10-Q filing, the company expects to incur more expenses in the form of legal and professional services associated with the data-breach incident. Furthermore, it had stated that its expenses might flare up due to increased investments in IT and security solutions as well as insurance services.
Equifax, Inc. Price and EPS Surprise
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