Thursday, June 25, 2015
There are three major credit agencies in the US Experian, TransUnion, and Equifax. Oligopoly. There are no competitors with the leverage to threaten their position as a core credit information provider. Wide moat, as Buffet would say. TransUnion has come public in the last week with a $3.75B valuation generating $400m EBITDA (annually). Assuming a conservative 35% tax rate, this valuation is 13 P/E on a company growing earnings at 15% rate. Cheap, cheap, cheap. Currently there are $3B of debt and minimal cash on the balance sheet, with high interest rates on their debt. The author of this newsletter thinks management will refinance this debt first chance available. Regardless, this company is to well established and too cheap to pass up. The author has purchased shares at $25.73.