Commercial business information provider Dun & Bradstreet (NYSE:DNB) closed out its fiscal year with a litany of costs and charges that it doesn't consider as part of its core operations. Its business trends were better when backing out these charges, but investments to recharge its growth prospects have yet to pay off for the company and its investors.

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Total revenues advanced 5% to almost $1.8 billion, with positive foreign currency fluctuations accounting for around two percentage points of that growth. In other words, organic growth was modest at 3% and consisted of very slight North American growth of 1% to about $1.3 billion and nearly flat in Europe to near $253 million. Overseas organic revenue growth was much stronger, jumping 43% in the Asia Pacific region to nearly $260 million and 18% in other international locations to $511.7 million. However, neither could do much to offset the minimal growth in Dun & Bradstreet's developed markets.

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Operating income improved 4% to $424.8 million. North American profits advanced 6% to offset weaker international and European trends. Net income also increased 4% and reached $260.2 million while share repurchases boosted diluted earnings per share growth to 6%. Earnings came in at $5.28 per diluted share, though management estimated recurring earnings of $6.25 when backing out what it deemed to be "non-core gains and charges." Its estimate of free cash flow was $251.9 million, or annual growth of 1%. This worked out to approximately $5.11 per diluted share. (For additional reading, see How To Decode A Company's Earnings Reports.)

Outlook
For the coming year, Dun & Bradstreet expects "core" revenue growth of 3 to 5%, operating income growth between 4 and 7%, and earnings growth in a range of 8 to 11%. It projects free cash flow between $310 million and $340 million, "which excludes the impact of legacy tax matters but includes MaxCV," the last of which refers to making technology changes to become more competitive. This works out to between roughly $6.30 and $6.90 per diluted share.

The Bottom Line
Dun & Bradstreet has been working to grow sales, but for 2012 it will be lucky to grow sales much beyond where it stood in 2008. The company has been spending to update its website and how customers access its payment histories records to determine the creditworthiness of its underlying customers. Examples of the new technologies include letting customers use apps and mobile phone software through Apple (Nasdaq:AAPL) and Google (Nasdaq:GOOG) operating platforms. However, these investments have yet to pay off, and management just let investors know that it is going to have to continue to spend on these initiatives.


At a forward P/E of around 11 and similar free cash flow multiple, the valuation isn't overly rich. The company is somewhat unique by focusing on business information. Rivals such as Equifax (NYSE:EFX) and Fair Isaac (Nasdaq:FICO) are focused primarily on the consumer market. However, growth remains a concern for now, and now that the stock is bumping up against its highs over the past year, is likely worth passing on for the time being. (To learn more on how to value stocks, read Fundamental Analysis.)

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At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.