EFX Equifax
A durable data moat with improving margins, but today’s price assumes unusually generous execution.
The story
Equifax is a mature credit-data and analytics franchise whose proprietary files, regulatory complexity, and embedded customer workflows create high switching costs. Organic growth should remain mid-single-digit, supplemented near term by the Círculo de Crédito acquisition, while cloud migration supports gradual margin recovery rather than a return to peak economics. Its moat is durable, but leverage, acquisition execution, and the valuation limit equity upside.
The prior drivers remain appropriate: recent revenue growth and the Mexico acquisition support 8% near-term growth, while current margins still leave a credible cloud-enabled path toward 24%. Sales-to-capital stays above the current 0.65 on expected post-migration efficiency, but leverage and integration risk justify retaining the 1.2 beta and 2% failure probability; the sharply higher share price reflects expectations more optimistic than these sustainable economics.
Value drivers
| Revenue growth (Y1) | 8.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 24.0% |
| Years to target margin | 7 |
| Sales-to-capital | 0.75 |
| Beta | 1.20 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 8.5% |
Valuation bridge
| PV of explicit FCFF | 5.10B |
| PV of terminal value | 9.92B |
| Equity value | 9.78B |
| ÷ shares → per share | $81.05 |
News
bearish -0.30 · 8 articles
- Insights Into Equifax (EFX) Q2: Wall Street Projections for Key Metrics
- Equifax (EFX) Earnings Expected to Grow: What to Know Ahead of Next Week's Release
- 1 Services Stock with Solid Fundamentals and 2 Facing Challenges
- Equifax Expands in Mexico With $750 Million Círculo de Crédito Deal
- Kyndryl, DXC, and Equifax Shares Are Falling, What You Need To Know
- Equifax (EFX) Faces A Valuation Test On Its $750 Million Círculo De Crédito Deal
- Here's What to Expect From Equifax’s Next Earnings Report
- 3 Reasons EFX is Risky and 1 Stock to Buy Instead
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 6.78B | 8.0% | 19.3% | 970.05M | 670.02M | 300.04M | 274.81M |
| 2 | 7.29B | 7.4% | 20.1% | 1.08B | 673.37M | 411.62M | 345.30M |
| 3 | 7.79B | 6.9% | 20.8% | 1.21B | 669.50M | 535.89M | 411.74M |
| 4 | 8.28B | 6.3% | 21.6% | 1.33B | 657.91M | 672.37M | 473.16M |
| 5 | 8.76B | 5.8% | 22.4% | 1.46B | 638.21M | 820.28M | 528.71M |
| 6 | 9.22B | 5.2% | 23.2% | 1.59B | 610.18M | 978.53M | 577.67M |
| 7 | 9.65B | 4.7% | 24.0% | 1.72B | 573.74M | 1.15B | 619.46M |
| 8 | 10.05B | 4.1% | 24.0% | 1.79B | 529.02M | 1.26B | 624.52M |
| 9 | 10.41B | 3.6% | 24.0% | 1.85B | 476.34M | 1.38B | 624.76M |
| 10 | 10.72B | 3.0% | 24.0% | 1.91B | 416.20M | 1.49B | 620.31M |
Key risks
- High leverage and refinancing exposure
- Círculo de Crédito integration and acquisition-return risk
- Cybersecurity, privacy regulation, and data-breach liabilities
Catalysts
- Cloud migration delivering sustained operating-margin expansion
- Successful Mexico integration accelerating growth and cross-selling