Equifax Inc.’s (NYSE:EFX) Stock Has Shown A Decent Performance: Have Financials A Role To Play?

Simply Wall St

Mon, Jul 21, 2025, 10:00 AM 4 min read

Equifax’s (NYSE:EFX) stock is up by 7.3% over the past three months. As most would know, long-term fundamentals have a strong correlation with market price movements, so we decided to look at the company’s key financial indicators today to determine if they have any role to play in the recent price movement. Specifically, we decided to study Equifax’s ROE in this article.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company’s success at turning shareholder investments into profits.

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The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Equifax is:

12% = US$615m ÷ US$5.1b (Based on the trailing twelve months to March 2025).

The ‘return’ is the profit over the last twelve months. So, this means that for every $1 of its shareholder’s investments, the company generates a profit of $0.12.

View our latest analysis for Equifax

We have already established that ROE serves as an efficient profit-generating gauge for a company’s future earnings. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.

To start with, Equifax’s ROE looks acceptable. Be that as it may, the company’s ROE is still quite lower than the industry average of 19%. Further, Equifax’s five year net income growth of 3.6% is on the lower side. Bear in mind, the company does have a respectable level of ROE. It is just that the industry ROE is higher. So there might be other reasons for the earnings growth to be low. Such as, the company pays out a huge portion of its earnings as dividends, or is facing competitive pressures.

As a next step, we compared Equifax’s net income growth with the industry and were disappointed to see that the company’s growth is lower than the industry average growth of 11% in the same period.