Down 13% YTD, is Dun & Bradstreet ready to bounce back?

Even in a year where the S&P 500 is up nearly 20% and the Nasdaq is up 37%, you can still find good value. One of them is an old name that got new life through an initial public offering (IPO) a few years ago. It’s a data and analytics company. Dunn & Bradstreet (NYSE:DNB).

Dun & Bradstreet has a history spanning more than 180 years and traces its roots back to a credit reporting agency in 1841. It went through various iterations over the years, eventually going private in 2019 and then relaunching as a public company in 2020.

Dun & Bradstreet then acquired Bisnode Business Information Group, a European data and analytics company, but it’s been a rough ride, with its stock price steadily declining after debuting at $25 per share in 2020. It is currently trading at around $10.66. Week to date, down 13%.

Dun & Bradstreet’s problems worsened in 2022 when the Federal Trade Commission (FTC) charged it with credit reporting errors and failure to correct them. The company had to offer refunds and fix its processes.

After three consecutive years of negative performance, is Dun & Bradstreet ready for a turning point?

past president

Dun & Bradstreet continued its upward trend after reporting third-quarter results on Nov. 1, with sales up 6% to $589 million. However, net income for the quarter fell 45% to $4 million. In the first nine months of the year, sales rose 3.3% to $1.7 billion, but the company posted a net loss of $49 million.

Dun & Bradstreet’s stock price has risen from about $8.75 per share in late October due to solid revenue growth and improved adjusted earnings. Adjusted revenue, which excludes costs related to acquisitions and divestitures, increased slightly to $116.2 million from $115.4 million in the same quarter a year ago. Additionally, the company’s adjusted EBITDA increased 6% year-over-year to $235.4 million, while its adjusted EBITDA margin remained at 40%.

For the full fiscal year, Dun & Bradstreet expects revenue of approximately $2.3 billion, up 2.5% to 4.3% year-over-year, with adjusted EBITDA expected to be in the range of $880 million to $910 million. This represents an increase of 2% to 5% over 2022 adjusted EBITDA of $863 million.

Dun & Bradstreet provides data and analytics in two main areas: Finance & Risk, and Sales & Marketing. Last quarter, Finance and Risk revenue increased 5% year-over-year to $235 million, while Sales and Marketing increased 3.9% to $186 million.

During the third quarter earnings call, CEO Anthony Jabbour said demand is growing for the company’s generative AI solutions through its AiBE platform. The platform is named after Abraham Lincoln, who was a credit reporting correspondent for Dun & Bradstreet.

“We are at the forefront of applying GenAI to business, and we look forward to seeing how our customers and prospects come to us for guidance and support in implementing this groundbreaking technology,” Jabbour said on the call.

New partnerships and long-term relationships

Dun & Bradstreet appears to be gaining some momentum with a 93% customer retention rate while adding several new multinational customers, including Siemens Energy, in the last quarter. We’ve also focused on building trust and strengthening relationships, increasing the number of multi-year relationships we build with our customers from 20% just a few years ago to 53%.

Additionally, Dun & Bradstreet is preparing to launch several new AI-related products in the future and will introduce new products with IBM as part of its expanding relationship with technology companies.

“Together we will build and launch new products based on the integration of D&B data and IBM watsonx. This new market entry will be part of an IBM consulting engagement to embed these new capabilities directly into solutions that our joint customers use as part of their daily workflows,” Jabbour said.

Analyst consensus on Dun & Bradstreet

This is a competitive market, but at the same time, the need for the type of data and analytics that Dun & Bradstreet provides is growing rapidly. Despite the loss, the stock price is just over $10 per share and the future price-to-earnings ratio (PER) is cheap at 9. We also have both recognition and global influence, along with expertise and focus on AI solutions. Help us stand out.

Analysts rate the stock a consensus Buy with a target price of $14 per share. Dun & Bradstreet is scheduled to release fourth-quarter and year-end results in February, which will likely include guidance for the year ahead. But Dun & Bradstreet is expected to turn things around next year.

disclaimer: All investments involve risk. Under no circumstances should this article be taken as investment advice or constitute liability for investment profits or losses. The information in this report should not be relied upon for investment decisions. All investors should conduct their own due diligence and consult their own investment advisors when making trading decisions.