Investment Thesis
TransUnion demonstrates solid revenue growth (+9.4% YoY) and exceptionally high net margins (31.9%), but faces fundamental concerns about cash generation quality and financial leverage. The severe disconnect between net income ($397.1M) and operating cash flow ($84.2M), combined with high debt-to-equity ratio (1.14x) and weak interest coverage (1.8x), indicates potential earnings quality issues and limited financial flexibility.
Strengths
- Solid revenue growth of 9.4% YoY demonstrating market demand
- Exceptionally high net profit margin of 19.7% operating margin and 31.9% net margin
- Strong liquidity position with current ratio of 1.93x and $732.5M cash
Risks
- Severe earnings quality concern: Operating cash flow ($84.2M) is only 21% of net income ($397.1M), suggesting non-cash earnings or potential accounting issues
- Critically weak free cash flow generation at only 1.5% of revenue ($19.0M), insufficient to service high debt burden or fund growth
- High leverage with debt-to-equity of 1.14x combined with weak interest coverage of 1.8x creates financial fragility and limits strategic flexibility
Key Metrics to Watch
- Operating cash flow trend and reconciliation with net income (quality of earnings)
- Interest coverage ratio - critical given $5.4B debt load
- Free cash flow generation capacity and sustainability for debt service
Financial Metrics
Revenue
1.2B
Net Income
397.1M
EPS (Diluted)
$2.04
Free Cash Flow
19.0M
Total Assets
12.0B
Cash
732.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
19.7%
Net Margin
31.9%
ROE
8.4%
ROA
3.3%
FCF Margin
1.5%
Balance Sheet & Liquidity
Current Ratio
1.93x
Quick Ratio
1.93x
Debt/Equity
1.14x
Debt/Assets
59.2%
Interest Coverage
1.79x
Long-term Debt
5.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T14:00:08.282173 |
Data as of: 2026-03-31 |
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