Equifax (EFX, Financial) is one of the leading U.S. credit bureaus. The company competes in a triopoly with TransUnion and Experian, all of which are great businesses due to their entrenched competitive position, valuable data sets, deep client integration and pricing power. In our view, what separates Equifax from its peers is its proprietary Workforce Solutions database, which is now its largest and most differentiated business. Workforce Solutions is an income and employment database used to evaluate the creditworthiness of a consumer in real-time. Furthermore, Equifax’s collection of alternative data is becoming increasingly important to lenders so they can assess the creditworthiness of consumers with thin or even nonexistent credit files. We were able to purchase this well-managed company at an attractive valuation due to concerns that rising interest rates would adversely affect credit inquiries. Despite these near-term headwinds, Equifax recently reiterated full-year guidance and continues to expect significant market outgrowth. Longer term, the company anticipates 7-10% organic sales growth, an outlook that we believe is not properly reflected in today’s stock price.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first-quarter 2022 commentary.
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