Shares of credit bureau TransUnion (NYSE: TRU) are down 11.5% as of 11:58 a.m. ET on Tuesday, according to data from S&P Global Market Intelligence. The stumble follows the release of its second-quarter earnings that met estimates but were undermined by disappointing guidance for the third quarter.
By nearly almost any measure, TransUnion’s second quarter was a winner. The top line of $948 million not only beat revenue estimates of $964 million but was up a hefty 30% year over year. Adjusted, non-GAAP earnings of $0.98 per share merely met analysts’ consensus estimate, although still topped the year-earlier comparison of $0.96 per share.
The forecasted future, however, isn’t quite as compelling. The company believes sales for the quarter underway will roll in between $935 million and $955 million, versus a consensus of $985 million. The analyst community is calling for third-quarter per-share earnings of $1.02, but TransUnion says it’s only on track to earn between $0.89 and $0.95 per share for the three-month stretch ending in September.
And things aren’t apt to improve dramatically in the fourth quarter. The credit bureau anticipates revenue of between $3.75 billion and $3.8 billion for the full year, generating a per-share profit of between $3.70 and $3.85. Analysts, however, had been calling for a top line of $3.84 billion and a bottom line of $3.87. TransUnion’s CEO Chris Cartwright explained within the official corporate report that headwinds for the mortgage lending business are already starting to blow, with mortgage revenue ultimately likely to decline between 30% and 35%.
The market’s response to the lackluster outlook is understandable, but perhaps unmerited. The stock was already down nearly 30% from September’s high, and it’s still trading within reach of last month’s new 52-week low. This business slowdown was arguably already priced in, and it’s even more so after today’s drubbing. Factor in that analysts are still modeling healthy top- and bottom-line growth for the coming fiscal year, and this steep sell-off is a buying opportunity for long-term investors who can remain patient and stomach a little volatility between now and then.