Equifax Inc. (NYSE:EFX) continues to grow organically and by acquisition. In its July investor presentation, the company outlined its plans to grow its core U.S. Consumer Information Services product revenue at an annual clip of 5%-7% and earn operating margin of more than 40%.
Its smaller initiatives, including commercial credit and workforce services in the United States and consumer credit products in emerging markets, could deliver low double-digit revenue growth going forward. Consider Equifax Inc. (NYSE:EFX) as a perpetuity on consumer lending — as long as lending volumes strengthen, so will its bottom line profits.
In the short term, consumer backlash may make for concerning headlines, but the economics of these credit bureaus’ business are sound. Their customers have no real alternatives to the three agencies’ products, and new regulation would only make it more difficult for new companies to enter the industry. Furthermore, given the bureaus’ pricing power, they can pass any and all litigation costs on to their customers.
While I cannot commend the agencies for their operational practices, they cannot be condemned as poor investments, either.
The article Are Credit Bureaus the New Evil Financial Companies? originally appeared on Fool.com and is written by Jordan Wathen.
Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs and Moody’s.
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