Give Credit to Dun & Bradstreet

03/23/2015 8:00 am EST


Patrick McKeough

Editor, Successful Investor

This featured stock began operating in 1841 and is now the world’s largest provider of credit reports on individual companies, observes Patrick McKeough, TSI Network.

Dun & Bradstreet (DNB) has a database which contains information on 240 million businesses in over 200 countries. Companies use these reports to make lending and purchasing decisions and to cut their credit losses.

Credit reports supply 63% of Dun & Bradstreet’s revenue. The remaining 37% comes from other information products, such as software that helps businesses manage Web sites and customer data.

In 2014, revenue rose 1.7%, to $1.68 billion from $1.65 billion in 2013. All regions saw gains: North America (74% of revenue), up 1.2%; Europe (15%), up 4.1%, and Asia (11%), up 1.9%.

The company spent $80 million on new growth initiatives, including cloud-based delivery systems. It’s also adding new information to its databases, including through acquisitions.

For example, it recently paid $125 million for NetProspex, a firm that collects corporate officers’ contact information, including email addresses, phone numbers, and titles.

These costs cut Dun & Bradstreet’s 2014 earnings by 8.5%, to $274.9 million from $300.5 million in 2013. Per-share earnings declined 1.8%, to $7.46 from $7.60, on fewer shares outstanding.

Dun & Bradstreet can easily afford to keep investing in new products. Its long-term debt of $1.35 billion is a manageable 28% of its market cap. It also holds cash of $319.4 million or $8.80 a share.

The company should earn $7.72 a share in 2015 and the stock trades at a moderate 17.5 times that estimate. It also raised its dividend by 5.1%. The new annual rate of $1.85 a share yields 1.4%.

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