Equifax Outlook - Mixed Signals Amid Volatility and Strategic Moves

Market Snapshot: Weak Technicals Suggest Caution

Takeaway: Despite positive money flows and strong fundamentals, Equifax (EFX) carries a weak technical score of 3.83, suggesting investors should avoid or watch closely for pullbacks.

News Highlights: Diversifying Legal and Strategic Fronts

• Legal Risks: A recent lawsuit was filed against SEB Professional North America, alleging failure to reimburse employees for business expenses. While not directly involving EFX, such news can weigh on consumer trust in business credit services.
• Professional Sports Growth: Major League Baseball announced a strategic investment in a women’s professional softball league. Though unrelated to EFX, the expansion of professional sports often drives consumer and business spending, potentially benefiting Equifax’s credit data services.
• Healthcare Innovation: DexCom received FDA approval for its G4 Platinum Professional Continuous Glucose Monitoring system. This highlights growing investment in healthcare technology, which could indirectly support Equifax’s business as more companies require credit checks for suppliers and partners in the sector.

Analyst Views & Fundamentals: Contrasting Signals

Analyst Consensus: A single analyst from UBS recently gave a “Strong Buy” rating, though their historical win rate is 25%, and average return over predictions is negative at -1.78%. This highlights a disparity between the recent rating and historical performance.

• Average Rating Score: 5.00 (simple mean of analyst ratings)
• Weighted Rating Score: 2.01 (performance-weighted average)
• Rating Consistency: Dispersed — one strong buy vs. weak historical track record
• Price Trend: EFX has risen by 9.03% recently, but this is at odds with the weak analyst expectations.

Key Fundamental Factors & Scores:

• Return on Equity (ROE): 5.51% – internal diagnostic score: 5.60 (mildly positive, but low for a credit bureau)
• Price-to-Book (PB): 2.59 – internal diagnostic score: 7.69 (suggests undervaluation potential)
• Total Profit / EBIT: 80.82% – internal diagnostic score: 7.69 (efficient profitability)
• Current Assets Turnover Ratio: 2.08 – internal diagnostic score: 7.69 (efficient asset management)
• Operating Revenue Growth (YoY): 5.64% – internal diagnostic score: 5.47 (moderate growth)

Money-Flow Trends: Strong Institutional Inflows

EFX is seeing positive money flows across all investor categories, with institutional and large-cap investors showing the most interest. The fund-flow score is 7.91 (good), with large-cap inflow ratio at 50.20% and extra-large at 50.69%. This suggests strong conviction from institutional investors, even as the broader technical outlook remains bearish.

Key Technical Signals: Mixed and Volatile

EFX has seen mixed technical signals over the past week, with 3 bearish indicators versus 1 bullish. The internal technical score is 3.83, which is weak.

Recent Indicators (By Date):

• Sep 8: WR Overbought and MACD Golden Cross
• Sep 9: WR Overbought
• Sep 15: WR Overbought and Dividend Payable Date
• Sep 16: WR Overbought and Bullish Engulfing

Indicator Scores:

• MACD Golden Cross: internal diagnostic score: 7.68 (strong positive signal)
• WR Overbought: internal diagnostic score: 3.5 (weak bullish momentum)
• Bullish Engulfing: internal diagnostic score: 3.14 (moderate support)
• Dividend Payable Date: internal diagnostic score: 1 (strong bearish influence)

Key Insight: While the MACD Golden Cross is a strong positive signal, bearish indicators like the dividend payable date and WR overbought condition are creating conflicting momentum. The overall trend is unclear and volatile.

Conclusion: Consider Waiting for a Pullback

Equifax’s fundamentals remain strong with internal fundamental score of 8.09, and money flows are positive. However, technical indicators are weak and volatile, with bearish signals dominating. Until the technical picture improves — particularly with a clearer trend and fewer conflicting signals — consider waiting for a pullback before entering a long position. Investors should also keep an eye on upcoming earnings and any developments related to the company’s credit data services.