Bullish stock to watch: IHS Markit Ltd (NYSE: INFO)

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IHS Markit Ltd (NYSE: INFO) stock generated over 6.8% in the last one month (as of January 14th, 2020; Source: Finviz). The firm posted better than expected results for the fourth quarter of FY19. Cash flow from operations and free cash flow totaled to $225.7 million and $147.5 million, respectively, in the fourth quarter. CapEx incurred was $78.2 million. The company had repurchased $500 million of shares in fiscal 2019. INFO had ended the fourth quarter with cash and cash equivalent balance of $111.5 million compared with $124.1 million in the prior quarter. Long-term debt stood at $4.9 billion in the quarter compared with $5.1 billion in the previous quarter.

INFO in the fourth quarter of FY19 has reported the adjusted earnings per share of 65 cents, beating the analysts’ estimates for the adjusted earnings per share by 6.6%, as per the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 5 percent to $1.12 billion in the fourth quarter of FY19, beating the analysts’ estimates for revenue by 0.05%. The company’s Adjusted EBITDA increased 8.6% to $452.9 million from the year-ago quarter. Adjusted EBITDA margin expanded 130 points (bps) year over year to 40.4%.

Moreover, the Revenues at the Resources segment grew 7% to $237.6 million year over year, with recurring revenues rising 5% organically. The Transportation segment posted year-over-year revenue growth of 9% to reach $324.5 million. Revenues at the CMS segment amounted to $127.7 million, which represents the decline of 8% year over year, with 1% organic growth in recurring revenues. Financial services segment’s revenues grew 5% year over year to $430.6 million, with 8% organic growth in recurring revenues.

For fiscal 2020, the company expects revenues to be in the range of $4.52 billion to $4.59 billion, including organic growth of 5% to 6%. The Zacks Consensus Estimate for revenues is pegged at $4.41 billion. Adjusted EBITDA is expected to be in the range of $1.86 billion to $1.89 billion. Adjusted EPS is expected to be in the range of $2.82 to $2.88 is anticipated. The Zacks Consensus Estimate for earnings is pegged at $2.58.

In addition, for FY 20, the company expects depreciation to be in the range of $220 million to $230 million, net interest to be in the range of $235 million to $245 million, capex to be about 6% to 6.5% of revenue and an adjusted effective tax rate to be about 18% to 20%.

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