Diverse Client Base & Buyouts Aid Equifax, Low Liquidity Ails

Equifax EFX stock has performed well in the past three months. It has gained 8.3% against the industry’s nd the Zacks S&P 500 composite’s 1.3% and 0.8% decline, respectively.

EFX reported impressive first-quarter 2025 results. EFX’s adjusted earnings were $1.53 per share, outpacing the Zacks Consensus Estimate by 9.3% and increasing 2% from the year-ago quarter. Total revenues of $1.4 billion surpassed the consensus estimate by 1.9% and grew 3.8% on a year-over-year basis.

How is Equifax Faring?

EFX’s top line registered a compounded annual growth rate (CAGR) of 6.6% in the last five years (2020-2024). We anticipate this momentum to continue over the long term, driven by the benefits of synergies from acquisitions, continued general consumer credit activity, product innovation, initiatives to foster enterprise growth and efficient business execution. Banking on these factors, we estimate revenues to grow 6.1% year over year in 2025, and then 7% and 7.2% in 2026 and 2027, respectively.

Equifax, Inc. Revenue (TTM)

Equifax, Inc. revenue-ttm | Equifax, Inc. Quote

Acquisitions have enabled the company to provide a broad insight into consumer performance, financial status, capabilities of customers and market opportunities. In 2023, Boa Vista Servicos was acquired, strengthening its presence in Brazil and enabling customers of the acquired company to utilize the expansive international capabilities of Equifax.

Midigator LLC and Efficient Hire were acquired by the company in 2022. Midigator expanded Equifax’s global footprint in digital identity and fraud prevention solutions, whereas Efficient Hire broadened its portfolio of employer and HR-focused solutions, boosting its ability to assist clients manage their hiring and employment needs.

Equifax works with a diverse clientele as it provides services to a diverse industry, including finance, mortgage, consumer, employee, telecommunications, automotive, commercial, retail, government and resellers. This huge client base is highly beneficial since it mitigates vulnerabilities in any sector by capitalizing on strengths in others.

Meanwhile, EFX’s top line is influenced by seasonality. Revenues from the online consumer information services component of the USIS segment are lowest in the first quarter due to reduced consumer lending activity. Revenues from the employer services business within the company’s workforce solutions segment are lower in the second, third and fourth quarters compared with the first quarter.

Equifax's current ratio at the end of the first quarter of 2025 was pegged at 0.85, lower than the industry's 1.16. Despite improving from the year-ago quarter's 0.73, a current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.

Zacks Rank & Stocks to Consider

EFX has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are AppLovin APP, currently sporting Zacks Rank #1 (Strong Buy), and Conduent CNDT, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AppLovin has a long-term earnings growth expectation of 20%. APP delivered a trailing four-quarter earnings surprise of 22.9%, on average.

Conduent has a long-term earnings growth expectation of 8%. CNDT delivered a trailing four-quarter earnings surprise of 5.9%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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