Equifax (EFX) is the forefather of what’s now known as Big Data.
It accumulates individuals’ consumer data — loans, credit cards, income data — and has built an algorithm that spits out a number that all major lenders look at as the ultimate litmus test of a consumer’s or business’ creditworthiness.
Consider some of the numbers EFX is dealing with. It works with the records of 600 million individuals, 80 million businesses, and 200 million employee files worldwide. It spits out 158 billion credit reports every month and manages 60,000 updates per second on those records.
It operates in the U.S. as well as 18 other countries where it is the market leader. But, its work has expanded beyond being a simple credit-reporting organization. EFX also works with businesses and governments to organize, assimilate, and analyze data to help optimize operations.
Whether it’s helping guide a hospital through implementing the Affordable Care Act and analyzing the implications on the business, to working with a restaurant to manage its immigration documentation and employment benefits, EFX has used its core credit focus to broaden its product offerings.
EFX Stock Is Unaffected By Economic Volatility
The great thing about the business is, especially now that EFX has diversified a bit, it’s relatively agnostic to economic ups and downs. When the economy is slow, businesses rely on EFX to make sure they’re lending to, and working with, top-quality clients and vendors. When the economy is strong, credit is expanding, so demand for its services grow as well.
Beyond its consumer and business operations, its long-term contracts with major federal agencies such as the Social Security Administration and the Centers for Medicare and Medicaid mean EFX has solid growth built into its DNA.
EFX stock isn’t going to go parabolic like a biotech might, but it has a lot of steady growth behind it and ahead of it. For example, EFX recently bought Veda Group for $1.8 billion. Veda is the leading credit-reporting agency in Australia and New Zealand, with operations throughout the Asia-Pacific region.
This kind of consolidation is typical in slow times like these, as the biggest and strongest entities begin to eat up the competition to spur more organic growth in new markets.
And, investors certainly agree. EFX stock is up more than 37% over the past year, which is impressive given the state of the global economy. That kind of performance is a testament to the company’s ability to find growth if it doesn’t come knocking.
Another thing to bear in mind is that, even for its size and reputation, EFX only carries a $13 billion market cap. That means it could be an attractive takeover target for companies such as Oracle (ORCL), SAP (SAP), or any number of other big data tech firms. That possibility isn’t factored in the price, though, but it’s likely that the stock would sell at a nice premium to its current valuation.
Either way, EFX stock is at a good point now, whether it continues to operate on its own or if someone swoops in and buys it. This is the kind of steady company that will still exist regardless of volatility in the markets.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
