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Experian’s momentum set to continue

The information services company is guiding to 7 to 9 per cent organic revenue growth this year
Experian’s momentum set to continue
  • North America was once again the standout performer in the year to 31 March
  • Organic revenue from the group’s consumer services business jumped by 17 per cent

Data services specialist Experian (EXPN) saw its organic revenue rise by 4 per cent in the year to 31 March, as 17 per cent growth in consumer services offset a flat performance from its ‘business-to-business’ (B2B) operations.

Momentum was led by North America, with the B2B segment benefiting from low interest rates and higher mortgage refinancing activity, while the consumer services business gained 9m new members. Together with a strong performance in Latin America, this offset weakness in the UK and Ireland and ‘EMEA/Asia Pacific’ region, keeping adjusted operating profit flat at $1.39bn (£977m).

Looking ahead, Experian is guiding to 7 to 9 per cent organic revenue growth for the current financial year, with 15 to 20 per cent growth in the first quarter.

“Their expectation of double-digit revenue growth and rising profit margins in the current year should be well received by investors,” says Steve Clayton, manager of the HL Select UK Growth Shares Fund (GB00BD5M6140), where Experian is a top holding. “Experian’s record of growth through adversity, with a notable acceleration as economies emerge from the pandemic sets it apart.”

That resilience does come at a price, however, with the shares currently trading at 31 times consensus 2022 earnings. But given the group’s high margins and the long-term structural demand for its data and analytical tools, that valuation isn’t unreasonable. Buy.

EXPERIAN (EXPN)   
ORD PRICE:2,544pMARKET VALUE:£ 23.2bn
TOUCH:2,541-2,545p12-MONTH HIGH:3,192pLOW: 2,265p
DIVIDEND YIELD:1.3%PE RATIO:41
NET ASSET VALUE:337¢*NET DEBT:$4.16bn
Year to 31 MarTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)
20174.331.0792.141.5
20184.580.9588.844.8
20194.860.9676.946.5
20205.180.9474.847.0
20215.371.0888.247.0
% change+4+15+18-
Ex-div:24 Jun   
Payment:23 Jul   
£1 = $1.42, *Includes $7.2bn in intangible assets or 791¢ a share

Last IC View: Buy, 3,028p, 17 Nov 2020