Here's Why Investors Should Retain TransUnion Stock for Now

TransUnion TRU stock has surged 68%, outperforming the 22.5% and 32.3% growth of the industry it belongs to and the Zacks S&P 500 composite in the past year, respectively.Image Source: Zacks Investment ResearchTRU has an expected long-term (three to five years) EPS growth rate of 20.9%. The company’s earnings for 2024 and 2025 are anticipated to rise 16% and 16.2% year over year, respectively. Revenues are expected to increase 8.9% in 2024 and 7.5% in 2025.Factors That Auger Well for TRUThe TransUnion and Restaurant Dive report reveals that QSRs (Quick Service Restaurants) are improving profitability, with 64% reporting increased traffic despite price hikes in the current quarter of 2024. This success is attributed to effective value-driven messaging and targeted promotions like combo meals and family bundles. A key insight is that QSRs using demographic data in loyalty programs saw greater success with promotions. However, only 52% of QSRs leverage third-party data, suggesting a missed opportunity to personalize offers and improve customer engagement.Moreover, the company’s recent partnership with First Orion and TNS contributes well to boosting TRU’s prospects. Together, these companies have launched branded calling with logos, providing secure, authenticated calls to prevent call spoofing. This feature is now available across the top three U.S. wireless carriers, helping businesses build trust with consumers and protect their brands from fraud.More than 4,500 U.S. businesses, including 15% of Fortune 500 companies, have adopted the solution. The number of branded calls is growing rapidly and is expected to reach 5 billion by the end of 2024. This initiative combats robocall scams, which cost consumers billions annually, while enhancing customer engagement and brand security.TransUnion’s commitment to rewarding shareholders through dividends is commendable. The company has demonstrated a strong track record, paying $81.8 million in dividends in 2023, up from $77.8 million in 2022 and $61.8 million in 2021. In the third quarter of 2024, TransUnion declared a cash dividend of 10.5 cents per share. These consistent dividend initiatives significantly boost investor confidence and reflect the company's dedication to returning value to its shareholders.TransUnion's current ratio (a measure of liquidity) stood at 1.68 at the end of the third quarter of 2024, up from 1.66 in the previous quarter and 1.54 in the same quarter the previous year. A current ratio above 1 typically indicates that a company is well-positioned to meet its short-term obligations.TRU: Key Risks to WatchThe surge in operating expenses imposes a significant challenge to TransUnion's bottom line. In the third quarter of 2024, total operating expenses increased by 17.4% compared to the previous year’s $791 million, excluding goodwill impairment costs. This upward trend has been consistent, with operating expenses growing by 14% in 2021, 34% in 2022 and 20% in 2023. These ongoing cost increases could affect the company’s bottom line in the future.Moreover, TRU faces intense competition in a diverse market, with rivals varying across different business segments, geographical areas and industry verticals. This high level of competition limits its pricing power and puts pressure on its earnings.TRU’s Zacks Rank and Stocks to ConsiderTRU currently carries a Zacks Rank #3 (Hold).A couple of better-ranked stocks from the broader Zacks Business Services sector are Charles River Associates CRAI and Parsons PSN.Charles River Associates currently carries a Zacks Rank of 2 (Buy). It has a long-term earnings growth expectation of 16%.CRAI delivered a trailing four-quarter earnings surprise of 31%, on average.Parsons presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.PSN has a long-term earnings growth expectation of 18.6%. It delivered a trailing four-quarter earnings surprise of 17.5%, on average.Must-See: Solar Stocks Poised to SkyrocketThe solar industry stands to bounce back as tech companies and the economy transition away from fossil fuels to power the AI boom.Trillions of dollars will be invested in clean energy over the coming years – and analysts predict solar will account for 80% of the renewable energy expansion. This creates an outsized opportunity to profit in the near-term and for years to come. But you have to pick the right stocks to get into.Discover Zacks’ hottest solar stock recommendation FREE.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Charles River Associates (CRAI): Free Stock Analysis Report TransUnion (TRU): Free Stock Analysis Report Parsons Corporation (PSN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks