TRU - Embedded Expectations Analysis - 2019 09 09
TransUnion (TRU:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 26.7x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management has concerns about driving growth, meeting revenue guidance, and controlling SG&A costs.Specifically, management may lack confidence in their ability to leverage their data to drive revenue, and they may be concerned about the sustainability of CreditVision Link growth. Furthermore, they may lack confidence in their ability to leverage the assets they acquired with Callcredit, and they may be concerned about further SG&A increases. Moreover, they may lack confidence in their ability to sustain recent margin improvements, and they may be concerned about the sustainability of strength in their insurance, diversified markets, and public sector businesses. Finally, they may lack confidence in their ability to meet their revenue and EBITDA margin guidance.
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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