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Multiple Acquisitions Benefit Equifax Despite Declining Liquidity
EquifaxEquifax(US:EFX) ZACKS·2024-10-10 16:15

Core Insights - Equifax Inc. is experiencing strong top-line momentum, which is expected to persist in the coming years, supported by acquisitions that enhance its core business [1][3] - The company reported impressive second-quarter 2024 results, with adjusted earnings of $1.82 per share, exceeding estimates by 5.8% and showing a year-over-year increase of 6.4%. Total revenues reached $1.4 billion, surpassing consensus estimates and increasing by 8.6% from the previous year [2] Revenue Growth - Equifax's revenues have compounded at an annual growth rate (CAGR) of 8.5% from 2019 to 2023, with expectations for continued growth driven by synergies from acquisitions, consumer credit activity, product innovation, and effective business execution [3] Acquisitions - The company has made strategic acquisitions to enhance its core business, including the acquisition of Boa Vista Servicos in 2023, which expanded its presence in Brazil and allowed customers to leverage Equifax's international capabilities [4] - In 2022, Equifax acquired Midigator LLC and Efficient Hire, enhancing its offerings in digital identity, fraud prevention, and HR-focused solutions [5] Dividend Appeal - Equifax is attractive to dividend-seeking investors, having paid out dividends of $191.8 million in 2023, $191.1 million in 2022, and $190 million in 2021, indicating a consistent dividend policy [6] Customer Importance - Equifax's services are crucial for customers who rely on credit information and analytical services for processing various types of loans, utilizing advanced statistical techniques to provide customized insights and decision-making solutions [7] Seasonality and Liquidity - Seasonality poses challenges in forecasting the company's prospects, making year-over-year comparisons more relevant. The current ratio at the end of Q2 2024 was 0.79, indicating potential liquidity issues as it is below the previous year's ratio of 1.2 [8]