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TransUnion’s (NYSE:TRU) stock has gained 25.2% year to date, significantly outperforming the 13.7% rally of the Zacks S&P 500 composite.
With an expected long-term earnings per share growth rate of 7% and a market cap of $13.3 billion, TransUnion seems to be a stock that investors should retain in their portfolio for now.
Factors That Bode Well
TransUnion’s addressable market includes the Big Data and analytics market, which is expanding at a rapid pace. Numerous underlying trends such as creation of massive amounts of data, advances in technology and analytics that allow data to be processed more swiftly and efficiently, results in increased demand for these business insights across industries and geographies.
Research firm, IDC, projects that worldwide revenues for big data and business analytics (“BDA”) solutions will witness a five-year compounded annual growth rate (“CAGR”) of 13.2% to reach $274.3 billion in 2022. In order to capitalize on the immense potential growth in this market, TransUnion has leveraged its next-generation technology to strengthen its analytics capabilities and further expand its database.
TransUnion’s acquisition strategy focuses on investment in unique and differentiated data assets, acquiring new capabilities for expanding in vertical markets and boosting international footprints. The 2018 acquisitions of Rubixis, Callcredit, iovation and Healthcare Payment Specialists enable the company with new market entry and portfolio diversification.
In May, 2019, the company announced that it has inked a deal to acquire TruSignal, Inc., a people-based marketing technology. The acquisition is expected to strengthen TransUnion's digital marketing solutions.
Last Words
Despite riding on significant growth prospects, TransUnion is not free from overhangs. A debt-laden balance sheet may limit its future expansion and worsen its risk profile. High degree of competition restricts its pricing power and puts a strain on the bottom line. Nevertheless, we believe that a large addressable market and acquisitions bode well for TransUnion in the long run.
Zacks Rank & Key Picks
Currently, TransUnion carries a Zacks Rank #3 (Hold).
Some top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting (NYSE:NCI) , Global Payments (NYSE:GPN) and NV5 Global (NASDAQ:NVEE) . While Navigant Consulting sports a Zacks Rank #1 (Strong Buy), Global Payments and NV5 Global carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, Global Payments and NV5 Global is 13.5%, 16.9% and 20%, respectively.
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