TRU - Embedded Expectations Analysis - 2021 06 17
TransUnion (TRU:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 31.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, and management is confident about their guidance outperformance, fintech vertical, and enterprise playbook.Specifically, management is confident they significantly outperformed quarterly guidance, expanded into a broader set of solutions for the telecommunications market, and will use their reorganization to enhance and accelerate the use of their enterprise playbook across the company. In addition, they are confident they offer wide-ranging information for insurance verticals in the U.S. and international markets, that funding is flowing back substantially to their fintech vertical, and that recent acquisitions provide valuable insights into household streaming services subscriptions. Furthermore, management is confident fintech players are expanding into new lending markets and that they continued to win new business through 2020
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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