Why Equifax Stock Is Falling Today

Credit rating service Equifax (EFX -4.88%) It feels the brunt of “higher levels for longer”, warning that the results are likely to suffer if interest rates remain high. Investors are cashing out, and the stock is down 10% as of 11 a.m. ET.

Credit demand is under pressure.

Equifax is a financial data analytics company best known as one of the leading providers of consumer credit scores. Yesterday, we reported our first quarter 2024 financial results. The company earned $1.50 per share in the first quarter, beating Wall Street estimates of $1.44, but revenue of $1.39 billion was slightly below expectations.

The company also expects to report earnings of $1.65 to $1.75 per share for the current quarter and revenue of $1.41 billion to $1.43 billion. Both ranges fell short of consensus estimates of $1.44 billion in revenue and $1.87 in earnings per share.

The issue is higher interest rates and their impact on mortgage demand. Fewer mortgage applications means less business for Equifax’s credit scoring tool.

Looking ahead to 2024, investors expected a rate cut by spring at the latest, which is expected to stimulate demand for loan products. However, as concerns about inflation in the United States remain, market expectations regarding the timing of interest rate cuts have also changed.

Is Equifax stock a buy after earnings decline?

Equifax held firm to its full-year guidance for earnings of $7.20 to $7.50 per share and revenue of $5.67 billion to $5.77 billion. This range is below analysts’ expectations for revenue of $5.78 billion and earnings per share of $7.64.

There are no problems with Equifax’s business, but a rebound in performance is expected to be difficult until the macro situation changes.

Before the earnings, Equifax shares had risen 50% since October on expectations of rate cuts. There is a risk that Equifax shares will fall further until the Federal Reserve provides more clarity.