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EFX · Analyze
Date: 2026-07-14 | Price: $167.97 | Sector: Financial Services (credit data/analytics) | Verdict conviction: [6.5] — BUY (small / stage-in)
Snapshot
| Metric | Value |
|---|---|
| Price | $167.97 (in $165–175 entry) |
| TTM P/E (GAAP) | ~29x (depressed by cloud-transition amortization) |
| P/FCF | ~13.6x |
| EV/EBITDA | ~14.5x |
| Div yield | ~1.2% |
| Gross / op margin | 56.4% / 18.0% (op depressed, should expand) |
| ROE / ROIC | 10.2% / 8.2% (recovering) |
1. Fundamentals — 🔵 FCF inflecting post-cloud-build
The whole thesis is a capex-to-FCF inflection. Equifax just finished a multi-year cloud transformation; the capex is rolling off and FCF is inflecting hard (~$133M → $1.13B+). GAAP P/E looks scary (~29x) because earnings still carry heavy transition amortization — but P/FCF is ~13.6x and margins/ROIC (op 18%, ROIC 8%) have room to expand as the cloud spend normalizes. FCF/sh ~$9.47.
2. Moat — 🟢 regulated oligopoly + a unique data asset
Equifax is one of three US credit bureaus (with Experian, TransUnion) — a regulated oligopoly with an irreplaceable, cumulatively-built consumer-credit data set. Its crown jewel is Workforce Solutions / The Work Number (payroll/income-verification data) — a proprietary, deepening data moat that's the real growth engine and hard for anyone to replicate (it requires employer payroll feeds built over decades).
Adversarial test: you cannot start a fourth national credit bureau — regulatory barriers, data-network effects, and lender integration make entry effectively impossible. The moat is intangibles + efficient-scale, genuinely wide.
Cyclical caveat: mortgage/consumer-lending volume-sensitive. A high-rate environment suppresses mortgage inquiries; a lending-cycle recovery is an embedded call option (and risk if rates stay high).
3. Valuation
| Model | Output |
|---|---|
| P/FCF | 13.6x — reasonable for a wide-moat oligopoly |
| FCF-based | FCF/sh ~$9.47 × 16–18x → $150–170 (base); higher on cycle recovery |
| GAAP P/E | ~29x optically rich — ignore until amortization normalizes |
Fair value $155–185 (base ~$168), with upside to $200+ if the lending cycle turns and margins normalize. Current $167.97 ≈ fair, at the low end of the FCF-normalization case.
Verdict — BUY, small / stage-in [6.5]
A genuinely wide-moat data oligopoly at a fair (not cheap) price, with a real FCF-inflection tailwind and a lending-cycle call option. The reason it's [6.5] not higher: the price already embeds much of the FCF recovery, ROIC is still only 8% mid-transition, and it's rate/mortgage-cyclical.
- Entry: in zone at $167.97; stage in — half now, add on a rate-driven dip to $150–160. Trim $210+.
- Size: good "financial-data moat" holding for Beta, but FDS is the higher-conviction, cheaper expression of the same theme — prioritize FDS, add EFX as a complementary oligopoly/data-cycle bet.
- Risks: (1) mortgage/lending volumes stay depressed on high rates; (2) FCF ramp disappoints; (3) a data-breach recurrence (reputational/regulatory — EFX carries history here).
- Thesis break: FCF fails to sustain above ~$1B, or Workforce Solutions growth stalls.
Sources: roic.ai. Public.com quote.