samedi 30 septembre 2017


Equifax (EFX), is exactly the kind of stock an investor should buy:

A ROE between 15 and 20 (which is not spectacular, but good enough).

A company that sells services (credit score) at repetition, to a variety of clients. Used world wide, and more and more every year as the population is growing.

Free cash flows grew every year since 2010, which is a great indicator of value creation. You can't find that kind of steady growth of cash flows very often.

And, finally, check these earnings per share:

2010: 2,11$
2011: 1,88$
2012: 2,22$
2013: 2,84$
2014: 2,97$
2015: 3,55$
2016: 4,04$

If you had bought Equifax in january 2010, you would have paid 31$ for a share.

That same share is selling for 106$ today. And it was selling for about 145$ last july.

Equifax had everything you were looking for.


With the hacking of their site and about informations taken about 143 millions americans and 100 000 canadians ,the reputation and the image of the firm are seriously hurt. Very few businesses could afford to have such a big hacking problem.

I wouldn't touch Equifax even if the forward PE (17) is now much lower than it's been in the last 5 years (average = 28).

One of the most important lessons you have to learn is: avoid scandals. It's been the case with many stocks. It's not at all the same kind  of scandal but, for instance, SNC Lavalin hasn't yet recovered for the scandal that happened 5 or 6 years ago.

In my opinion, there's probably 8 chances out of 10 that Equifax will go through some important turbulences over the next 2-3 years.

I may be wrong. But reputation is something very important on the stock market. Don't be a stupid contrarian.

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