Underlying growth has returned at Anglo-Dutch publishing group
That could reflect the fact that revenue growth at data and analytics business Reed Business Information (RBI) has finally returned after three consecutive years of declines. In fact, underlying sales there rose 1 per cent to £695m. The continued disposal of print titles has also resulted in the data operations side now generating a quarter of RBI's sales. Growth has also returned at the Lexis Nexis Legal and Professional unit, with sales up 1 per cent to £1.63bn.
Mr Engstrom adds that legal markets have now stabilised and, as such, Reed will be rolling out new products to bolster sales in 2012. Meanwhile, the Lexis Nexis risk management unit has continued to strengthen, with revenues there rising 4 per cent to £908m. Still, the exhibitions business derived flat sales of £707m – although growth should return this year as a result of the cycling in of biennial shows.
Numis Securities expects 2012 pre-tax profit of £1.48bn, giving EPS of 50p (from £1.39bn and 46.7p in 2011).
|REED ELSEVIER (REL)|
|ORD PRICE:||538p||MARKET VALUE:||£6.54bn|
|TOUCH:||537.5-538p||12-MONTH HIGH:||581p||LOW: 445.9p|
|DIVIDEND YIELD:||4%||PE RATIO:||17|
|NET ASSET VALUE:||179p*||NET DEBT:||155%|
Reed Elsevier offers relatively safe exposure to the publishing sector and the dividend yield is certainly attractive. That said, there's a reasonably hefty debt pile and the shares, trading on about 11 times expected earnings, aren't especially cheap. Hold.
Last IC view: Fairly priced, 566p, 28 Jul 2011