Equifax’s EFX top line is benefiting from its diverse clientele and investments made on Equifax cloud. The company’s ability to remain operationally sound while tackling weaker mortgage and hiring macroenvironment is a green flag for investors. However, low liquidity and cybersecurity threats are concerning.

EFX’s revenues are anticipated to increase 5.4% and 11.9% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 5.5% in 2025 and 23.7% in 2026.

Factors That Auger Well for Equifax’s Success

EFX’s top line has witnessed a compounded annual growth rate (CAGR) of 6.6% in the last five years (2020-2024). We anticipate revenues to increase 5.8% year over year in 2025 and the top line to hold on to the growth momentum over the next few years. This growth is anticipated to have been driven by the synergistic benefits from acquisitions, continued general consumer credit activity, product innovation, initiatives to foster enterprise growth and efficient business execution.

Equifax, Inc. Revenue (TTM)

Equifax operates with a diverse client base, providing diverse services to industries like finance, mortgage, telecommunications and government. A broad client base is advantageous for mitigating problems in any sector by capitalizing on the strengths in the others. The company’s primary aim is to expand its customer base through organic growth, M&A activities or partnerships.

EFX is benefiting from its five-year investment in the Equifax cloud. The company is close to generating 85% of its top line in the new Equifax cloud. Management anticipates having a competitive edge by leveraging the technology in 2025 and beyond. This will allow the company to focus on growth, develop products, innovate and incorporate AI swiftly.

In the fourth quarter of 2024, Equifax witnessed an adjusted EBITDA of $502 million, increasing about $30 million from the preceding quarter. The adjusted EBITDA margin of 35.4% was in line with the company’s third-quarter 2024 framework. The resilience portrays strong operational efficiency despite the headwinds from weaker mortgage and hiring macros and leads us to expect exponential growth as macroeconomic conditions improve.

Risks Faced by EFX

The 2017 cybersecurity incident in which criminals stole highly sensitive personal data of approximately 143 million of its consumers. Despite the company having spent a long time improving cybersecurity architecture, its brand image might remain tainted by the incident. A tarnished brand image can hurt the company’s revenue-generating capabilities.

Equifax's current ratio (a measure of liquidity) at the end of fourth-quarter 2024 was 0.75, lower than the industry's 1.19. The metric declined from the preceding quarter's 0.88 due to a significant decline in the total current assets. A current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.

Equifax’s Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the broader Zacks Business Services sector are Climb Global Solutions, Inc. CLMB and Limbach Holdings, Inc. LMB, each currently carrying a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Climb Global Solutions has a long-term earnings growth expectation of 12%. CLMB delivered a trailing four-quarter earnings surprise of 59.3%, on average.

Limbach Holdings has a long-term earnings growth expectation of 12%. LMB delivered a trailing four-quarter earnings surprise of 42.3%, on average.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Limbach Holdings, Inc. (LMB) : Free Stock Analysis Report

Climb Global Solutions, Inc. (CLMB) : Free Stock Analysis Report

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

Zacks Investment Research