Is It Time to Consider Buying Equifax Inc. (NYSE:EFX)?

Today we’re taking a look at incumbent Equifax Inc. (NYSE:EFX). The company’s shares recorded a decent price increase of 19% on the NYSE in the last few months. Following the recent rise in share price, the company is approaching its highs for the year. Since it’s a large-cap stock with high analyst coverage, you can assume that any recent changes in the company’s outlook are already priced into the stock. But what if the stock is still a bargain? Let’s take a look at Equifax’s prospects and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Equifax

What is Equifax worth?

Equifax appears to be expensive according to our price multiple model, which compares the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (P/E) ratio because there is not enough information to reliably predict the stock’s cash flows. We note that Equifax’s ratio of 60.49x is above its peer average of 27.8x, which suggests the stock is trading at a higher price compared to the Professional Services industry. If you like the stock, you should watch out for a possible price decline in the future. Since Equifax’s share price is quite volatile, this could mean that it could sink lower (or even rise further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator of how much the stock is moving relative to the rest of the market.

What growth will Equifax generate?

Future prospects are an important consideration when thinking about buying a stock, especially if you are an investor seeking growth in your portfolio. Although value investors would argue that intrinsic value relative to price is most important, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next few years, the future looks bright for Equifax. It looks like higher cash flow is expected for the stock, which should lead to a higher share valuation.

What this means for you

Are you a shareholder? EFX’s optimistic future growth appears to have been factored into its current share price, with shares trading above the industry price multiple. However, this raises another question: Is now the right time to sell? If you believe that EFX should trade below its current price, it may be profitable to sell at a high price and then buy it again when the price falls towards the industry’s P/E ratio. But before you make that decision, consider whether the fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on EFX for a while, now might not be the best time to get into the stock. The price has outperformed its industry peers, meaning there is likely no more upside from mispricing. However, the positive outlook for EFX is encouraging, making it worth diving deeper into other factors in order to benefit from the next price drop.

If you want to learn more about Equifax as a company, it is important to be aware of all the risks the company faces. For example, we discovered it 1 warning sign that you should take a look to get a better picture of Equifax.

If you are no longer interested in Equifax, you can use our free platform to see our list of over 50 other stocks with high growth potential.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.