TRU - Embedded Expectations Analysis - 2021 09 17
TransUnion (TRU:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 35.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management appears concerned about fintech revenue growth, public sector verticals, and fraud mitigation opportunities.Specifically, management may lack confidence in their ability to grow fintech revenues, continue outpacing the market recovery, and maintain an attractive market position in consumer credit data. In addition, they may be overstating the potential of their investments in TruValidate, their global competitiveness in the fraud mitigation market, and their innovation capabilities. Furthermore, management may lack confidence in their ability to execute strategies for the public sector vertical, further develop solutions for government agencies, and win more contracts from rental screening firms.
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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