Is it Time to Sell Equifax After the Latest Earnings Miss? 3 Things Investors Need to Consider

Equifax (EFX) reported its first-quarter earnings results yesterday after the market closed, and the stock has started tumbling as a result. It’s down more than 5% so far Thursday.

The credit-scoring company brought in revenue of $1.389 billion while Wall Street was expecting at least $1.4 billion. Profits narrowly came in above expectations with an adjusted EPS of $1.50 compared to the consensus of $1.44.

Much of this comes from the housing market cooling, as excessive interest rates have buyers and sellers alike sitting on the sidelines waiting for more favorable conditions. Property prices haven’t come down in response to higher interest rates to make matters worse.

Equifax benefits from mortgage credit inquiries and is expecting the Fed’s rates to negatively impact its business going forward. In fact, the company is forecasting an 11% decline in mortgage-related inquiries through the remainder of the year. The original expectation was for a decline of 16%.

However, the non-mortgage side of the business got a lift during the quarter, contributing 80% of the revenue and representing 9% growth year over year. Equifax says its AI and machine learning investments are paying off in its new ratings products. 

Still, the company was cautious in issuing its guidance for the current quarter, at just $1.41 billion to $1.43 billion compared to the $1.44 billion consensus analysts were expecting. Equifax did update its guidance for 2024 to $5.72 billion in revenue and $7.35 adjusted earnings per share.

EFX has now fallen more than 7% through 2024 thus far, losing all the gains it had rallied for in February. At one point the stock was up 12% on the year. 

Given the downtrodden outlook for the year ahead, is this your sign to sell the stock and cut losses? We found 3 things in the VectorVest stock software you need to see that will help you make your decision one way or the other.

EFX Has Fair Upside Potential and Safety With Poor Timing

VectorVest is a proprietary stock rating system designed to save you time and stress while empowering you to win more trades. You’re given all the insights you need to make calculated decisions in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. You’re even given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for EFX:

• Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. This offers much better insight than a simple comparison of price to value alone. The RV rating of 0.98 is considered fair for EFX, but the stock is overvalued. Its current value is just $160.
• Fair Safety: The RS rating is a risk indicator. It’s derived through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 1.05 is fair for EFX. 
• Poor Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year. EFX has a poor RT rating of 0.75, reflecting its performance through 2024 thus far.

The overall VST rating of 0.93 is deemed fair, albeit a bit below the average. Nevertheless, the stock is currently rated a SELL in the VectorVest system. Take a closer look at this situation and make your next move with complete confidence by getting a free stock analysis today!

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VectorVest advocates buying safe, undervalued stocks, rising in price. EFX is down today after sharing lackluster first quarter earnings results coupled with a cautious outlook for the quarter ahead and the rest of the year. The stock has fair upside potential and safety but its timing is poor.

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