Morningstar | TransUnion Has Been Outperforming Its Peers
TransUnion is one of the leading credit bureaus, along with Equifax and Experian. These three companies dominate the U.S. market and have replicated the business model internationally and expanded into adjacent verticals. TransUnion is the smallest of the three, but since its IPO in 2015, it has been the strongest performer, generating double-digit top-line growth and sizable margin improvement.We think TransUnion can maintain its outperformance in the near term, as its upgraded infrastructure, product innovation, and smaller size are all working in its favor. However, the company is aggressively pursuing acquisitions, and its longer-term outlook will likely hinge on execution on this front and how the makeup of the company shifts over time. The company’s track record suggests that so far it is managing this evolution without any material dilution to the wide moat that surrounds its core business. Its biggest recent move is an acquisition of Callcredit, the second-largest credit bureau in the United Kingdom, in a deal valued at $1.4 billion. This marks a break from the string of smaller deals the company has pursued. In our view, the price looked reasonable, and we like that TransUnion is expanding the moatiest part of its business.We think the most value-creative long-term expansion opportunity for TransUnion and its peers lies in emerging markets, where growing middle-class populations should allow the companies to export their business model. But opportunities are somewhat limited, given the set of conditions necessary to establish operations, and we think the near-term opportunities are in smaller countries that won't move the needle. For TransUnion, the most intriguing opportunity is in India, which we think is the only country with long-term revenue potential comparable to the domestic market. TransUnion’s early entry has allowed it to build a commanding market share position in this country. While it will likely take many years to fully realize this market's potential, we think this position provides meaningful long-term upside.TransUnion is an information and insights company. The company provides consumer reports, actionable insights and analytics such as credit and other scores, and decisioning capabilities to businesses. The company has the following reportable segments: United States Markets, which provides consumer reports, actionable insights and analytics such as credit and other scores, and decisioning capabilities to businesses; International, which provides services similar to its United States Markets segment to businesses in select regions outside the United States; and Consumer Interactive, which provides solutions that help consumers manage their personal finances and take precautions against identity theft.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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