Hi Monkeys,
As we all know, Equifax fudged up bigly by failing to secure sensitive personal information, potentially impacting over 145 million individuals. In response, affected individuals have filed lawsuits and top executives have left the firm with talks of compensation clawbacks following suit. Since the story broke on 09/07/17, Equifax is down by 25% after rallying back from being as far down as 34%. To date, Equifax’s TTM P/E ratio is resting at 22.8 - lower than it’s peer TransUnion at a TTM P/E ratio = 40.88 but on par with Experian at a TTM P/E = 21.96.
My question to you…
Does a security breach of this scale, along with its legal and ethical implications, justify a loss of value equivalent to $4.2 bn in market cap? Or is Equifax oversold and ripe for a bargain buy?
There aren't too many alternatives to Equifax, and their credit reporting services tend to differ from Experian and TransUnion so that they complement one another rather than act as substitutes. FICO relies on all three to produce their summary credit score. That, and it’s only a matter of time until the public forgets this incident and moves on to the next one (likely another data breach). All together, do you think this is enough to protect Equifax from any long term impacts as a result of this recent breach?
Let me know what you think in the comments below.
Given that there aren't many other options for consumers, coupled with the fact that credit scores need to be calculated using Equifax, I feel like the response was an emotional/alarmist overreaction to negative news, and that it'll bounce right back once people forget. Seems like a bargain buy to me.
Hi deiasaurusrex,
Thanks for sharing your thoughts on this. You're the first reply I've received since recently starting to post discussion topics and it's very much appreciated!
Although I think this is a bargain buy, it will also likely open up the door for a larger conversation on the Credit Reporting industry especially in an upcoming election year.
I feel the credit reporting industry is a baseless industry that should not be a private entity, rather it should be a government function sitting within the IRS. No longer should private entities collect and profit off data in which they have not asked explicit consent to use.
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