Ticker:
(EFX)
Year Founded:
1899
Headquarters
Atlanta,
Georgia
Equifax
Equifax is a global data, analytics and technology company headquartered in Atlanta, Georgia. The company is one of the leading credit bureaus in the U.S., providing critical services for lenders’ credit decisions and helps lower financing costs for borrowers. Equifax benefits from an advantageous business model in which credit and employment data is provided for free from financial institutions and employers, respectively. Equifax leverages its unique data sets and analytical capabilities to provide value-added products and insights to its customers.
First Entered Quality Growth Strategy
Q3 1992
Entered
Quality Value Strategy
Q2 2018
Re-Entered Quality Growth Strategy
Q1 2020
Entered Global Quality Growth Strategy
Q2 2020
Know What You Own
We own Equifax across all three Jensen Quality Strategies due to its attractive long-term growth prospects and sustainable competitive advantages. Growth drivers include new product development, expansion into new markets, and business productivity enhancements. The company’s primary competitive advantage is derived from high entry barriers associated with the ownership of unique data assets at scale. Industry dynamics are favorable, with the credit bureau industry a tri-party oligopoly and Equifax’s Workforce Solutions business bolstered by a vast first-mover advantage in employment records data compilation.
Pandemic Standout: 15 Years in the Making
Equifax’s resiliency since the inception of the pandemic can be traced back to a strategic investment made nearly 15 years ago that transformed EFX into the business it is today.
In 2007, Equifax expanded beyond its core credit bureau business by acquiring TALX, owner of “The Work Number” (TWN), a proprietary database of current and historic income and employment records. By 2020, EFX had grown the database to include over 136 million employment records that are regularly updated by over one million organizations.
Equifax’s Workforce Solutions segment was born through this acquisition and has since grown to become EFX’s largest, fastest growing and most profitable segment. EFX uses this vast TWN database to provide clients with income verification services. This business shined during the pandemic, as mortgage and non-mortgage verification services sales grew over +57% Y/Y in 2020. In addition, the company’s unemployment claims processing, a distinctly counter-cyclical business, sales grew +34% Y/Y in 2020.
Outlook
Today, Equifax stands as the only company that provides a combination of credit, employment, background check, income, and wealth data to its diversified customer base.
We maintain a positive view of Equifax’s competitive position and long-term growth prospects, driven by its strategy of using unique data sets and analytics to improve customer decisions. We also think that a concerted effort to diversify its business mix between more cyclical (e.g., mortgage) and counter-cyclical (e.g., unemployment claims) end markets should allow EFX to grow its business through various market environments.
Interested in Learning More?
For a listing of each Strategy’s current holdings, please click a link below.
Jensen Quality Growth Strategy
Jensen Global Quality Growth Strategy
The company discussion in this article is solely intended to illustrate the application of our investment approach and is not to be considered a recommendation by Jensen. Our views expressed herein are subject to change and should not be construed as a recommendation or offer to buy or sell any security and are not designed or intended as a basis or determination for making any investment decision for any security. Our discussions should not be construed as an indication that an investment in a security has been or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of any security discussed herein.
Past performance is no guarantee of future results. The information contained herein represents management’s current expectation of how the Jensen Strategies will continue to be operated in the near term; however, management’s plans and policies in this respect may change in the future. In particular, (i) policies and approaches to portfolio monitoring, risk management, and asset allocation may change in the future without notice and (ii) economic, market and other conditions could cause the strategy and accounts invested in the strategy to deviate from stated investment objectives, guidelines, and conclusions stated herein.
Certain information contained in this material represents or is based upon forward-looking statements, which can be identified by the use of terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue”, or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of a client account may differ materially from those reflected or contemplated in such forward-looking statements.
This information is current as of the date of this material and is subject to change at any time, based on market and other conditions.
Jensen Investment Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training. Although taken from reliable sources, Jensen cannot guarantee the accuracy of the information received from third parties.
© 2022 Jensen Investment Management.