Equifax Inc. (NYSE: EFX) may not be done paying the massive security breach that was exposed last year, but shareholders can breathe a sigh of relief that Equifax’s business appears to be stabilizing. On Thursday, Equifax reported a 40 percent increase in fourth-quarter earnings one quarter after taking a 27 percent hit to profits.
In its second earnings report since the massive breach exposed sensitive data or more than 147 million Americans, Equifax reported diluted earnings per share of $1.42 on revenue of $838.5 million. Analysts had been expecting EPS of $1.35 on revenue of $825.69 million.
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The company reported $26.5 million in expenses related to the breach, down from $27.3 million one quarter ago. Equifax says full-year 2017 breach costs totaled $114 million. Earlier in the day on Thursday, Equifax disclosed that it has identified another 2.4 million Americans impacted by the security breach.
Interim CEO Paulino Barros has repeatedly assured investors that the company is doing everything in its power to restore its reputation, including hiring a new head of security last month.
“We invested heavily in advancing our data security infrastructure and improving our consumer support, and we delivered on our financial commitments,” Barros says. Barros took over as CEO back in September after former CEO Richard Smith resigned following news of the breach.
Equifax is still reportedly under investigation by the Federal Trade Commission and every state attorney general in the country.
Equifax stock initially traded slightly higher in the after-hours session after tumbling more than 10 percent in the month leading up to earnings. Shares are now down more than 21 percent in the past six months as investors and analyst struggle to determine just how long and how much Equifax will pay for the security shortcomings.
Morningstar analyst Brett Horn says litigation costs, lost business and an uptick in spending could continue to plague Equifax for a while, but the stock could still be a value for long-term investors.
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“We believe increased security spending could have a modest but lasting impact on margins,” Horn says. “Altogether, we think a realistic view of these outcomes has a meaningful but not dramatic impact on the company’s long-term value.”
Morningstar has an “undervalued” rating and $122 fair value estimate for EFX stock.
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Equifax Inc. (EFX) Stock Shows Its Resilience originally appeared on usnews.com
