The company is a supplier of credit data to businesses. Its systems and data are deeply imbedded in North American business like its DUNS number and proprietary credit (paydex) scores. Businesses use this information to determine the creditworthiness of their counterparties. Finance and risk solutions comprise of about 60% of the business, while sales and marketing support solutions make up the remaining 40%. The company has a sticky, scalable software-as-a-service business model.
The company has been around since 1841, but taken private in early 2019 by a group led by William Foley II, chairman of Fidelity National Financial (FNF) and Black Knight Inc. (BKI), in a $5.4 billion deal. It returned to the public market in July at $22 a share. It shot up briefly to around $28, but has fallen to trade at around $18.50 currently.
The following chart shows the company's balance sheet. The company has about $3.55 billion in long-term debt with a similar amount of equity. The debt load is high, but not of very serious concern given the company’s repeatable, cash-generative business.
CEO Anthony Jabbour and Chief Financial Officer Bryan Hipsher have been buying the stock on the open market, with the latest purchases made earlier this month.
With a forward price-earnings rato of 17, the stock appears to be reasonably priced for a data and analytics business model. Similar companies like Equifax Inc. (EFX, Financial) and FactSet Research Systems Inc. (FDS, Financial) trade with earnings multiples in the 30s.
According to Refinitiv, 12 analysts follow the company. The mean 12-month price target is $27.50 per share, a nearly 50% upside from the current price (the range is $21 to $33). The company continues to make bolt-on acquisitions and expand internationally. Given the reasonable price-earnings ratio, analyst targets and substantial insider buys, I am optimistic that Dun & Bradstreet will do well in the medium to long term.
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys:: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.