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A faster-than-anticipated rebound in residential mortgage inquiries combined with accelerated adoption of The Work Number in government social services contracts could expand operating margins beyond 25% and drive FY2027 EPS above $11.00.
Persistent mortgage origination contraction with inquiries dropping >15% YoY for two consecutive quarters.
Equifax Inc. (EFX) presents a balanced investment case at $145.78, where high-margin data assets and post-cloud margin leverage are balanced by mortgage cyclicality and financial leverage.4
Equifax possesses strong competitive advantages rooted in its proprietary employment database (The Work Number) and triopoly credit reporting infrastructure. In FY2025, consolidated revenue reached $6,074.5M with operating income of $1,095.2M, led by Workforce Solutions contributing $1,141.5M in segment operating profit. Completion of the firm's multi-year cloud overhaul is driving tangible operational leverage, demonstrated by 120 bps margin expansion in Q2 2026 and $150M in projected cumulative AI run-rate savings across 2026-2028.578
However, these structural positives are balanced by near-term mortgage inquiry sensitivity and an elevated debt burden of $5,467.1M. At the October 9, 2026 price of $145.78, the stock trades at a 9.36% discount to our composite fair value of $160.83 (10.32% upside), which places the risk-reward profile firmly within the Hold rating band.4
The Work Number delivers 52.1% EBITDA margins and expands through exclusive payroll records that create self-reinforcing network effects.5
Cloud migration unlocks 50-75 bps annual core operating margin expansion with AI run-rate savings doubling to $150M across 2026-2028.5
FY2025 free cash flow reached $1,134.3M on $1,615.7M operating cash flow, supporting over $1B in annual excess capital generation.
Hold: Composite fair value of $160.83 represents 10.32% upside, offering balanced risk-reward.
Equifax Inc. is a global data, analytics, and technology company that provides consumer and commercial credit reporting, employment and income verification, and fraud prevention services. The company operates across three principal segments: Workforce Solutions, U.S. Information Solutions (USIS), and International.
In FY2025, Workforce Solutions generated $2,582.3M in revenue, USIS generated $2,078.5M, and International generated $1,413.7M, serving financial institutions, employers, healthcare organizations, and government agencies.
A prolonged mortgage downturn coupled with debt refinancing at prevailing pre-tax borrowing costs of 6.22% on $5,467.1M of total debt would pressure annual interest expense and reduce cash conversion. If core revenue growth stalls below 6.11% CAGR and operating margins drop under 18.03%, annual free cash flow expansion would stall, compromising net debt reduction and multiple resilience.
Equifax maintains a Wide economic moat anchored by two distinct, highly defensible data franchises: The Work Number (Workforce Solutions) and its credit bureau infrastructure (US Information Solutions). The Work Number operates as a de facto regulatory-compliant clearinghouse for income and employment verifications, generating $2,582.3M in revenue and $1,141.5M in operating income in FY2025. Exclusive direct integrations with corporate payroll systems create dual-sided network effects and steep switching costs: employers benefit from outsourced verification management, while lenders, government agencies, and background screeners rely on instant, authoritative data that cannot be replicated by manual alternatives.
In consumer credit reporting, USIS generated $2,078.5M in revenue and $475.2M in operating income in FY2025, benefiting from statutory and regulatory frameworks (FCRA) and triopoly credit bureau status. With the completion of its enterprise cloud migration, Equifax has consolidated legacy systems into a modern cloud fabric, expanding by 120 bps in Q2 2026 and securing structural cost advantages over competitors. These advantages ensure comfortably exceeds the firm's 8.72% .
The highlighted cell is Fair value when every assumption sits at its base level ($160.83). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $799.8M after modeled reinvestment of $266.6M, with terminal value at 79.3% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to , reinvestment, or resets materially.
Accelerating mortgage verification recovery and faster AI cost realization would justify upgrading the rating band to Buy.
Industry capex-to-revenue stands at 3.4% and capex-to-depreciation at 0.65, while Equifax capex moderated to $481.4M (7.9% of revenue) following completion of its enterprise cloud overhaul.7
A falling interest rate environment sparks mortgage refinancing and purchase activity, accelerating verification inquiries across USIS and Workforce Solutions while commercial non-mortgage demand expands at high single digits.
Persistent elevated interest rates depress lending inquiries, while regulatory pressure or consumer-permissioned verification bypasses create top-line headwinds across core credit and verification lines.
Reflects the company's wide moat and post-cloud free cash flow inflections balanced against $5.47B in total debt and cyclical mortgage sensitivity.4
Manage balance sheet exposure given $5,467.1M in total debt by tracking debt-to-EBITDA progress and interest expense trends under pre-tax debt costs of 6.22%.
Equifax offers high-quality defensive data assets and high cash conversion, but the modest 10.32% upside to fair value ($160.83) does not warrant an aggressive overweight.6
The Work Number data monopoly and cloud-enabled operating leverage underpin steady multi-year compounding toward $10.15 EPS in FY2027, supporting continued retention of core positions.1
Near-term mortgage inquiry sensitivity and $5.47B debt load argue against adding capital ahead of clear lending inflection signals.
We maintain a Hold rating on Equifax Inc. with a composite fair value of $160.83 per share, representing 10.32% upside from the October 9, 2026 price of $145.78.4
While completed cloud migration and Workforce Solutions record expansion provide structural margin expansion and robust cash conversion, the current valuation adequately reflects near-term operational momentum amidst cyclical mortgage headwinds and financial leverage.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Persistent high mortgage rates suppress consumer borrowing inquiries while emerging verification aggregators introduce fee friction. Operating margins fail to expand past 18.03%, slowing earnings expansion.
Operating income was $1,095.2M on $6,074.5M revenue in FY2025 (18.03% margin). A decline below 18.0% falsifies the thesis of 50-75 bps annual core operating leverage and AI cost savings.57
Consensus projects revenue growth of 11.11% in FY2026 ($6,749.4M) and 8.76% in FY2027 ($7,340.7M). Deceleration to 6.11% CAGR triggers severe top-line contraction across USIS and Workforce Solutions.1
Current forward P/E is 16.05x and model terminal multiple is 18.0x. A 20% contraction to 14.4x aligns with peer and historical cyclical trough multiples under $5.47B total debt.4
The five developments that would weaken our investment case.
Erosion of verification pricing power or employer record disintermediation.
Current:52.1% in Q2 2026
Alert ifBelow 48.0%
Capitalized software reinvestment resurgence delaying free cash flow compounding.
Alert ifAbove 10.0%
Broad deceleration in non-mortgage verification and market share loss to alternative aggregators.
Current:7.2% to 8.4% guided range for FY2026
Alert ifBelow 5.0%
Deceleration in corporate payroll partner integrations and employer onboarding.
Current:10% YoY growth in Q2 2026
Alert ifBelow 4.0% YoY
Inability to achieve 50-75 bps annual core operating leverage and failure to realize AI cost savings.
Current:18.03% in FY2025
Alert ifBelow 18.00%
Equifax generates sustained economic profits supported by an 8.72% WACC and 18.03% GAAP operating margin ($1,095.2M EBIT on $6,074.5M revenue in FY2025), generating operating cash flow of $1,615.7M and FCF of $1,134.3M.267
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Under the moderate discount rate, $36.96 comes from forecast-period earnings and $136 from the long-term value, totaling $173.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Solve for the growth rate that makes the model value equal the report-date share price.
Core revenue expands at 11.11% in FY2026 and 8.76% in FY2027 in line with consensus. Cloud operating leverage delivers ~75 bps annual core margin expansion, driving EPS toward $10.15 in FY2027.15
Mortgage origination rates rebound sharply while non-mortgage verification accelerates via $100M+ in new government awards. AI run-rate savings surpass $150M, expanding operating margins past 24.8% by 2030.5
Execution within guided ranges confirms balanced risk/reward, maintaining the existing rating.
Deterioration in verification inquiry volume or pricing pressure would compress operating margins and impair operating leverage.
Earnings quality is solid, driven by recurring subscription and transactional verification data with GAAP net income of $660.3M converting to $1,615.7M in operating cash flow in FY2025, supported by high EBITDA margins in Workforce Solutions.57
Consensus FY2026 EPS of $8.56 and FY2027 EPS of $10.15 have held stable post-Q2 results, reflecting steady operational execution balanced against persistent mortgage market headwinds.1
Key indicator of verification pricing power and high-margin operating leverage.
Measures execution on multi-year cost reduction commitments, confirming operating leverage and margin expansion from completed cloud transformation.
Substantial balance sheet leverage requires disciplined debt paydown to lower interest burdens and protect equity value.
Validates consolidated revenue trajectory across core verification and credit reporting segments against full-year market expectations.
Ensures capital expenditures remain disciplined post-cloud migration to maximize free cash flow generation and debt paydown capacity.
| $4.92B |
| $5.12B |
| $5.27B |
| $5.68B |
| $6.07B |
| +5.4% |
| Gross profit | $2.94B | $2.95B | $2.93B | $3.16B | $3.43B | +3.9% |
| Operating income | $1.14B | $1.06B | $933.6M | $1.04B | $1.10B | -1.0% |
| Net income | $744.2M | $696.2M | $545.3M | $604.1M | $660.3M | -2.9% |
| EPS (diluted) | $6.02 | $5.65 | $4.40 | $4.84 | $5.32 | -3.0% |
| EBITDA | $1.58B | $1.68B | $1.58B | $1.72B | $1.87B | +4.2% |
| R&D | — | — | — | — | — | — |
| SG&A | $1.32B | $1.33B | $1.39B | $1.45B | $1.61B | +5.1% |
Equifax generated $1,615.7M in operating cash flow and $1,134.3M in free cash flow in FY2025 against GAAP net income of $660.3M, reflecting cash conversion of over 2.4x net income. With CapEx stabilizing at $481.4M, free cash flow conversion provides robust support for dividend payments ($2.24/share baseline) and debt service.67
Capital deployment priorities center on debt reduction against $5,467.1M in total debt, disciplined bolt-on acquisitions in international and verification verticals, and opportunistic share repurchases, utilizing >$1B annual excess free cash flow.
Return on invested capital is inflecting upward as multi-year cloud migration capital outlays taper off ($481.4M CapEx in FY2025) while operating profits expand through AI productivity gains of $150M.
ROIC comfortably exceeds the computed WACC of 8.72% and cost of equity of 10.01%, confirming substantial economic value generation.
Workforce Solutions produced $1,141.5M in operating income (44.2% margin) on $2,582.3M revenue in FY2025, with Q2 2026 EBITDA margins at 52.1%.
EWS remains the primary engine of consolidated earnings growth and margin accretion.
Operating cash flow reached $1,615.7M and free cash flow reached $1,134.3M in FY2025, supporting >$1B in annual excess cash generation capacity.
Transition from infrastructure build to cash-flow harvest funds capital return and debt reduction.
Equifax trades at 16.05x forward P/E compared to information peer Verisk at 20.41x forward P/E.
Multiple reflects leverage ($5.47B total debt) and cyclical mortgage exposure, leaving room for rerating as balance sheet de-levers.
| Revenue | $6,074,500,000 |
|---|---|
| Cost of revenue | $2,645,600,000 |
| Gross profit | $3,428,900,000 |
| Operating expenses | $2,333,700,000 |
| Operating income | $1,095,200,000 |
| Non-operating items and tax | -$434,900,000 |
| Net income | $660,300,000 |
| Total assets | $11,864,200,000 |
|---|---|
| Cash | $180,800,000 |
| Current assets | $1,412,200,000 |
| Total liabilities | $7,126,000,000 |
| Current liabilities | $2,335,400,000 |
| Shareholders’ equity | $4,623,800,000 |
| Net income | $660,300,000 |
|---|---|
| Operating inflow | $1,615,700,000 |
| Depreciation and amortization | $726,900,000 |
| Stock-based compensation | $78,400,000 |
| Other operating adjustments | $150,100,000 |
| Operating cash flow | $1,615,700,000 |
| Cash available | $1,794,800,000 |
| Beginning cash | $169,900,000 |
| Exchange-rate effect | $9,200,000 |
| Investing outflow | $554,300,000 |
| Capex | $481,400,000 |
| Other investing activities | $72,900,000 |
| Financing outflow | $1,059,700,000 |
| Ending cash | $180,800,000 |
| Investing cash flow | -$554,300,000 |
| Financing cash flow | -$1,059,700,000 |
Source: SEC EDGAR · Filed 2026-02-19 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| Workforce Solutions | $2.6B | 42.5% | 6.1% |
| USInformation Solutions | $2.1B | 34.2% | 9.8% |
| International | $1.4B | 23.3% | 4.4% |
Source: SEC EDGAR · Filed 2026-02-19 · SEC EDGAR
| Revenue by geography | Revenue | Share | YoY |
|---|---|---|---|
| United States | $4.7B | 76.7% | 7.7% |
| Other | $498.3M | 8.2% | 4.4% |
| United Kingdom | $325.9M | 5.4% | 7.6% |
| Australia | $318.1M | 5.2% | 2.9% |
| Canada | $271.4M | 4.5% | 2.5% |
Point-in-time financial data used in the 2026-10-11 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $3.1B | $1.1B | $488.8M | $823M | $649.5M | $173.5M | $268.7M | $37.1M | $0 | $157.6M | — | -$2B | $1.2B | — | $129.3M | $157.3M | $2.7B | 26.2% | — | 5.2% | — |
| 2017-12-31 | $3.4B | $1.1B | $587.3M | $816M | $597.8M | $218.2M | $290.9M | $38.3M | $77.1M | $187.4M | — | -$349.5M | -$263.7M | $129.3M | $336.4M | $357.8M | $2.7B | 24.7% | — | 5.1% | — |
| 2018-12-31 | $3.4B | $789.8M | $310.5M | $672.2M | $350.3M | $321.9M | $315.9M | $42.5M | $0 | $187.9M | — | -$461.5M | -$311M | $336.4M | $223.6M | $223.6M | $2.7B | 13.1% | — | 5.5% | — |
| 2019-12-31 | $3.5B | $35.2M | -$384.1M | $313.8M | -$85.8M | $399.6M | $337.3M | $49.7M | $0 | $188.7M | — | -$697.5M | $557.9M | $223.6M | $401.3M | $401.3M | $3.4B | -9.6% | — | — | — |
| 2020-12-31 | $4.1B | $1.2B | $520.1M | $946.2M | $524.9M | $421.3M | $399.3M | $54.7M | $0 | $189.5M | — | -$492.7M | $810.8M | $401.3M | $1.7B | $1.5B | $4.4B | 16.4% | — | 4.8% | — |
| 2021-12-31 | $4.9B | $1.6B | $744.2M | $1.3B | $865.8M | $469M | $489.6M | $54.9M | $69.9M | $190M | — | -$3.4B | $617.7M | $1.7B | $224.7M | $224.7M | $5.3B | 23.1% | — | 5.7% | — |
| 2022-12-31 | $5.1B | $1.7B | $696.2M | $757.1M | $132.6M | $624.5M | $568.6M | $62.6M | $0 | $191.1M | $491.5M | -$959.5M | $273.7M | $224.7M | $285.2M | $248.4M | $5.8B | 20.6% | — | 7.9% | — |
| 2023-12-31 | $5.3B | $1.6B | $545.3M | $1.1B | $515.5M | $601.3M | $619.8M | $71.8M | $0 | $191.8M | -$77.6M | -$878.2M | -$306.2M | $285.2M | $216.8M | $1.5B | $5.7B | 17.7% | — | 8.3% | — |
| 2024-12-31 | $5.7B | $1.7B | $604.1M | $1.3B | $813M | $511.5M | $680.6M | $81.6M | $0 | $193.2M | -$704.6M | -$511.5M | -$846.4M | $216.8M | $169.9M | $169.9M | $5B | 18.3% | — | 8.8% | — |
| 2025-12-31 | $6.1B | $1.9B | $660.3M | $1.6B | $1.1B | $481.4M | $726.9M | $78.4M | $927.5M | $232.8M | $76.2M | -$554.3M | -$1.1B | $169.9M | $180.8M | $180.8M | $5.1B | 18.0% | — | 8.4% | — |
Equifax Inc. (EFX) trades at 16.1x forward earnings against a peer median of 20.5x. Its EV/EBITDA of 11.7x compares with a peer median of 18.9x. The comparison uses 4 peers: Verisk Analytics Inc., J.B. Hunt Transport Services Inc., Generac Holdings Inc. and Hubbell Incorporated, as of 2026-10-10 to 2026-10-11.
| Trend | Impact | Note |
|---|
| Digital automated verification of income and employment | positive | Shift from manual pay-stub verification to automated instant API verification via The Work Number expanding in government benefits and talent acquisition. |
| Cloud and generative AI infrastructure integration | positive | Enterprise cloud migration enables deployment of AI tools yielding $150M in expected run-rate cost savings across 2026-2028. |
| Higher interest rate sensitivity in residential lending | negative | Elevated mortgage rates constrain consumer transaction velocity, requiring diversification into non-mortgage verticals. |
Equifax is positioned as an indispensable verification infrastructure provider with strong pricing power in Workforce Solutions ($2,582.3M FY2025 revenue) and credit bureau triopoly standing in USIS ($2,078.5M FY2025 revenue).8
| Level | Action | Why |
|---|
| $145.78 as of October 9, 20264 | Hold current position | Shares trade at a 9.36% discount to fair value of $160.83, warranting patience. |
| Below $135.00 | Evaluate adding exposure | Provides a wider margin of safety (>15% discount to fair value) during cyclical mortgage inquiry lulls. |
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Discounted forecast-period cash flows ($33.88) plus discounted terminal value ($130) minus signed net debt per current share ($41.99) equals the $122 lens value shown above. Negative net debt is net cash, so subtracting it raises value.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
| J.B. Hunt Transport Services Inc. |
| $21.5B |
| 23.2x |
| 1.7x |
| 13.7x |
| 18.4% |
| 7.4% |
| GNRC | Generac Holdings Inc. | $13.3B | 17.3x | 3.0x | 22.6x | 9.5% | 17.9% |
| HUBB | Hubbell Incorporated | $25.1B | 20.6x | 4.0x | 20.0x | 24.4% | 21.7% |
