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Cult of the number overly punishes LSE Group and Costco

Sometimes analysts' short-term focus misses the point where quality businesses are concerned.
Cult of the number overly punishes LSE Group and Costco
  • Obsession with short-term earnings targets can sometimes punish quality shares
  • Long-term investors need to learn to filter media noise
  • Other companies this week are Morrisons, Forterra, Spirax-Sarco and Domino's Pizza

Shares in London Stock Exchange Group (LSEG) sold off last week because analysts did not like the guidance on how much money the company was going to spend and invest in integrating Refinitiv – a global financial data and workstation business – into the group. 

For me, this is missing the point. The Refinitiv deal is transformational and very positive for the London Stock Exchange. It moves the business towards highly profitable data and analytics revenues, which are backed by subscriptions, and diversifies it from volatile and less predictable stock exchange-related business. The deal stacks up both strategically and financially in terms of the returns it can provide for shareholders.

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