DUN & BRADSTREET CORP. (New York symbol DNB; www.dnb.com) began operating in 1841 and is now the world’s largest provider of credit reports on individual companies. Its database contains information on 220 million businesses in over 200 countries. Companies use these reports to make lending and purchasing decisions and to cut their credit losses.
The company gets 63% of its revenue from credit reports. The remaining 37% comes from other information products, including software to help businesses manage customer data and websites.
We recently recommended that investors sell Moody’s (New York symbol MCO) and McGraw-Hill Companies (New York symbol MHP), which owns Standard & Poor’s. That’s because the U.S. Justice Department has accused Standard & Poor’s of failing to downgrade mortgage-backed securities even though it knew home prices were falling and borrowers were having trouble repaying their loans. The threat of a similar lawsuit will probably also weigh on Moody’s stock for years.
However, Dun & Bradstreet evaluates only the credit worthiness of individual companies; it does not provide ratings on bonds and other securities issued by companies as the other two agencies do. As a result, Dun & Bradstreet played no role in the 2008-2009 subprime mortgage crisis.
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Investing in stocks: Company aims to boost revenues by making data 30% more accurate
In 2012, Dun & Bradstreet’s revenue fell 5.4%, to $1.66 billion from $1.79 billion in 2011. If you disregard the impact of businesses that the company sold during the year, revenue would have fallen 1%, as the uncertain economy prompted businesses to cut spending on information products.
Earnings fell 2.2%, from $291.2 million in 2008 to $284.7 million in 2010. However, Dun & Bradstreet is an aggressive share re-purchaser, so its earnings per share rose 7.2%, from $5.27 to $5.65. Earnings rebounded to $318.8 million, or $6.94 a share, in 2012.
Dun & Bradstreet aims to boost its long-term revenue growth by making its data 30% more accurate. In 2012, it spent $30.3 million (or 1.8% of its revenue) on upgrading its computer systems and other related initiatives. The company holds cash of $149.1 million, or $3.61 a share.
Earnings should rise to $7.51 a share in 2013. The stock trades at 10.9 times that estimate. The company has a long history of raising its dividend. The current annual rate of $1.60 a share yields 2.0%.
In the latest edition of Wall Street Stock Forecaster, we look at Dun & Bradstreet’s balance sheet and whether it can support the added risk of its investments in new projects and acquisitions, particularly in overseas markets. We conclude with our clear buy-hold-sell advice on the stock.
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Moody’s and Standard & Poor’s have taken some blame for their role in the so-called subprime mortgage bubble that triggered the 2008-2009 financial crisis, and in February the U.S. Justice department sued Standard & Poor’s for $5 billion, alleging that it “knowingly” defrauded investors with its inflated ratings on mortgage-backed securities. Do you believe there is a solution to a situation like this that does not involve intrusive government regulation? Let us know what you think.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Changes to this Policy
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TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
