Transunion - "The Big Three" (BUY - 100)

TransUnion provides risk and information solutions. The company operates in three segments: U.S. Information Services (USIS), International, and Consumer Interactive. The USIS segment provides consumer reports, risk scores, and analytical and decisioning services for businesses. These businesses use its services to acquire new customers; assess consumer ability to pay for services; identify cross-selling opportunities; measure and manage debt portfolio risk; collect debt; verify consumer identities; and investigate potential fraud.

This segment serves various verticals, including financial service, insurance, healthcare, collection, property management, public sector, and other markets. The International segment offers credit reports, analytics, decision services, and other value-added risk management services; and consumer services, which enable consumers to manage their personal finances.

This segment serves customers in financial services, insurance, automotive, collections, and communications industries through direct and indirect channels. The Consumer Interactive segment provides credit reports and scores, credit monitoring, fraud protection and resolution, and financial management solutions that enable consumers to manage their personal finances and take precautions against identity theft.

This segment offers its products through online and mobile interfaces, as well as through direct and indirect channels. The company serves customers in approximately 30 countries and territories, including North America, Latin America, the United Kingdom, Africa, the Asia Pacific, and India.

The company was formerly known as TransUnion Holding Company, Inc. and changed its name to TransUnion in March 2015. TransUnion was founded in 1968 and is headquartered in Chicago, Illinois.

Share price, revenues, EBITDA

Transunion being one of the smallest of the "Big Three" consumer credit rating agencies continues its performance with delivering increasing EBTDA, revenues due to its oligopolistic stance.

Currently its correlation is at a mere -0,03 against the SP500 presenting an opportunity for the patient investor, as its historical correlation has been at 0.8
Markets currently trading in a low volatility-environment (ViX<13) should translate to the correlation increasing, and the share moving in tandem with broader market indices.

The agency has a presence in over 30 countries, meaning that a significant portion of its revenues are contingent on global growth. While global growth has been subdued due to the U.S-China trade-war, there is a lot of upside once these tensions subside. Currently the markets prices in an undue amount of risk into the stock, being reflected in that its share price is lower than it should be.

Trading at a P/E of 42.5x, could be considered quite high on its own, but has to be compared to the competition among the "Big Three".

Equifax trading at a P/E of 48.2x, and Experian 40.63x.

Therefore, the stock isn't necessarily high-priced, but at sensible yet undervalued valuations. We rate the stock a BUY with a target price of 100$ until Q1 of 2020.