How Is Experian Performing Amid The Proliferation of Data (EXPN)?

  • Mar 05, 2019 GMT
  • Team Kalkine
How Is Experian Performing Amid The Proliferation of Data (EXPN)?

Overview 

Experian PLC (Ticker Symbol: EXPN) is a Dublin, Ireland based world's leading global information services company, assisting clients all over the world with data and analytical tools. Though the roots of the company go back to more than 125 years, the group in its current form was established in 1996 when the UK and US businesses were combined under the ownership of GUS. The group employees more than 17,000 personnel across 37 countries, serving more than 12,000 clients around the globe. The company is a constituent of the FTSE 100 index. Brian Cassin is the Chief Executive Officer of the group.

Segments

Recently, the group reshuffled its business segments: three business segments of Credit Services, Marketing Services and Decision Analytics were merged into a single ‘Business-to-Business' segment, which includes operations that will help companies manage and analyse data. Consumer Services, which helps millions of people across financial centres, has been retained as a separate segment. Within Business-to-Business, Data and Decisioning will be the two sub-divisions. The company segregates its geographic operations into North America, Latin America, UK and Ireland, and EMEA/Asia Pacific.

Key Financial Metrics (1HFY 2019, in $m)

(Source: Interim Report, Company Website)

 

Financial Highlights (1HFY 2019, in $m)

  • The benchmark revenue in the first half of FY 2019 increased to $2,364 million, reflecting a 7 per cent total revenue growth over the corresponding period last year. The company also reported 9 per cent total revenue growth at constant currency and organic revenue growth of 8 per cent. The growth in revenue was assisted by organic growth in Business-to-Business of 9 per cent and the corresponding growth of 9 per cent in Consumer Services. Furthermore, all regions delivered organic revenue growth, with strong progress across new products.
  • The Benchmark EBIT grew by 7 per cent in H1 FY2019 to $649 million. The margin increased to 27.5 per cent, an increase of 20 basis points at constant rates; however, it was down by 10 basis points at actual rates. The increase in EBIT reflects excellent operating leverage, particularly across Business-to-Business.
  • The company reported growth in statutory operating profit of 6 per cent, while statutory profit before tax declined by 5 per cent in H1 FY2019.
  • The benchmark EPS grew by 12 per cent at constant rates. However, basic EPS at actual rates decreased by 4 per cent in comparison to the first half of FY2018.
  • An interim dividend of 14.0 US cents per share was announced, reflecting a 4 per cent rise over the last year. The company also undertook net share repurchases of US$107 million in the first half.

Ratios

(Source: TR)

Ratio Commentary

  • The company’s EBITDA and operating margin have been consistent over the periods. Moreover, the EBITDA margin is significantly higher than the industry median, mainly due to the good performance by Business-to-Business segment.
  • The group’s net margin and return on equity declined in the first half of FY2019. However, the company’s margins were still higher than the industry.
  • The liquidity position, though below industry levels, has improved for six months ended 30 September 2018
  • The group is more leveraged than its competitors, though the position has remained stable over the periods.

Share Price Performance

  • On 5th March 2019, at the time of writing (before market close), EXPN shares were trading at GBp 2,001, up by 0.1 per cent against its previous day closing price.
  • Stock's 52 weeks High and Low is GBp 2,069.00/GBp 1,494.50. At the time of writing, the shares were trading at 3.38 per cent lower than its 52w High and 33.76 per cent higher than its 52w low.
  • Stock’s average traded volume for 5 days was 1,632,006.40; 30 days - 1,527,709.87 and 90 days - 1,782,522.18. The average traded volume for 5 days was up by 6.83 per cent as compared to 30 days average traded volume.
  • On the valuation front, the stock was trading at a trailing twelve months PE multiple of 26.6x as compared to the industry median of 11.4x.
  • The company’s stock beta was 1.13, reflecting relatively high volatility as compared to the benchmark index
  • Total outstanding market capitalisation was around £18.21 billion and a dividend yield of 1.73 per cent.

Risks Assessment and Growth Prospects  

  • The company expects full-year organic revenue growth to remain at the top-end of the guidance range. The company is also expected to expand its global platform opportunities across various regions.
  • Data is increasing across the world, which provides companies with many great opportunities.
  • Any critical change in credit markets could significantly impact the company’s financial performance and reduce growth potential.

Conclusion

Given the current trading levels, there are strong indications that a positive movement in the stock can be seen. Support is coming from a few growth drivers, specifically from the expansion of data and Business-to-Business. The market can keep a watch on Experian stock going ahead.

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