Equifax (EFX) is a Zacks Rank #5 (Strong Sell) after the company beat the Zacks Consensus Estimate when the company last reported. Equifax (EFX) is in the consulting services space and has faced a lot of pressure over the last year. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description                       

Equifax, Inc. engages in the provision of information solutions and human resources business process outsourcing services. It operates through the following business segments: U.S. Information Solutions, Workforce Solutions and International. The U.S. Information Solutions segment includes consumer and commercial information services, mortgage loan origination information, financial marketing services, and identity management. The Workforce Solutions segment covers employment, income, and social security number verification services as well as complementary payroll-based transaction and employment tax management services. The International segment offers information, technology, and services to support debt collections and recovery management in Canada, Europe, Latin America and Asia Pacific. The company was founded by Cator Woolford and Guy Woolford in 1899 and is headquartered in Atlanta, GA.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of Equifax (EFX)  I see four straight beats of the Zacks Consensus Estimate over the last year. The most recent quarter was a beat with the company posting $2.12 when the consensus was calling for $2.10.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For EFX I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $8.70 to $7.69 over the last 60 days. 

The next year has moved from $10.82 to $9.51 over the last 30 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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Equifax, Inc. (EFX) : Free Stock Analysis Report

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

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