TransUnion (TRU)

Credit reporting company TransUnion (NYSE:TRU) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 7.8% year on year to $1.17 billion. Guidance for next quarter’s revenue was better than expected at $1.13 billion at the midpoint, 1.7% above analysts’ estimates. Its non-GAAP profit of $1.10 per share was 5.4% above analysts’ consensus estimates.

Company Overview

One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.

A combination of increasing reliance on data and analytics across various industries and the desire for cost efficiency through outsourcing could mean that companies in this space gain. As functions such as payroll, HR, and credit risk assessment rely on more digitization, key players in the data & business process services industry could be increased demand. On the other hand, the sector faces headwinds from growing regulatory scrutiny on data privacy and security, with laws like GDPR and evolving U.S. regulations potentially limiting data collection and monetization strategies. Additionally, rising cyber threats pose risks to firms handling sensitive personal and financial information, creating outsized headline risk when things go wrong in this area.

TransUnion's primary competitors include the other two major credit bureaus, Equifax (NYSE:EFX) and Experian (LON:EXPN), along with specialized competitors in various verticals such as FICO (NYSE:FICO) in credit scoring, Verisk Analytics (NASDAQ:VRSK) in insurance analytics, and LifeLock (owned by NortonLifeLock, NASDAQ:NLOK) in consumer identity protection.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $4.44 billion in revenue over the past 12 months, TransUnion is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, TransUnion grew its sales at an impressive 10.4% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. TransUnion’s annualized revenue growth of 8.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, TransUnion reported year-on-year revenue growth of 7.8%, and its $1.17 billion of revenue exceeded Wall Street’s estimates by 3.2%. Company management is currently guiding for a 8.9% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6.5% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and indicates the market sees some success for its newer products and services.

TransUnion has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average operating margin of 15.3%.

Analyzing the trend in its profitability, TransUnion’s operating margin decreased by 5.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, TransUnion generated an operating margin profit margin of 17.8%, up 3.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

TransUnion’s EPS grew at an unimpressive 7.3% compounded annual growth rate over the last five years, lower than its 10.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of TransUnion’s earnings can give us a better understanding of its performance. As we mentioned earlier, TransUnion’s operating margin expanded this quarter but declined by 5.5 percentage points over the last five years. Its share count also grew by 2.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For TransUnion, its two-year annual EPS growth of 12% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, TransUnion reported adjusted EPS of $1.10, up from $1.04 in the same quarter last year. This print beat analysts’ estimates by 5.4%. Over the next 12 months, Wall Street expects TransUnion’s full-year EPS of $4.20 to grow 9.4%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

TransUnion has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.7% over the last five years, quite impressive for a business services business.

Taking a step back, we can see that TransUnion’s margin dropped by 10 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

TransUnion’s free cash flow clocked in at $240.4 million in Q3, equivalent to a 20.6% margin. This result was good as its margin was 5.7 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

TransUnion historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.1%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, TransUnion’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

TransUnion reported $749.9 million of cash and $5.12 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.61 billion of EBITDA over the last 12 months, we view TransUnion’s 2.7× net-debt-to-EBITDA ratio as safe. We also see its $110.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was great to see TransUnion’s revenue guidance for next quarter top analysts’ expectations. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 4.3% to $84.13 immediately following the results.

Updated: December 4, 2025 at 11:06 PM EST

Before deciding whether to buy TransUnion or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are some bright spots in TransUnion’s fundamentals, but its business quality ultimately falls short. To kick things off, its revenue growth was impressive over the last five years. And while TransUnion’s cash profitability fell over the last five years, its impressive operating margins show it has a highly efficient business model.

TransUnion’s P/E ratio based on the next 12 months is 17.9x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $106.95 on the company (compared to the current share price of $84.21).