The Experian (LSE:EXPN) share price pushed upwards after its H1 results on 15 November, 2023. The company’s shares has flatlined over the past year.
But coupled with this strong performance and a solid forecasts, is Experian an outstanding ‘buy’ today?
H1 earnings
This morning, Wednesday 15 November, Experian posted earnings before interest and tax of $928m for the six months ended 30 September. This represented an impressive gain from 2022 when the company registered $873m in the same period.
Meanwhile, revenue from ongoing activities rose 6% at actual rates to $3.41bn — in line with expectations.
Increased demand for affordability assessments and investment portfolio analysis, driven by a cost-of-living squeeze, has contributed to a rise in demand for Experian’s services.
The company’s overall revenue during this period was further boosted by successful product launches in the Latin America business.
Experian stated that all geographic regions made positive contributions, with Latin America experiencing double-digit growth, North America demonstrating strong performance, EMEA and Asia Pacific showing improvement, and the UK and Ireland displaying resilient growth.
Forecasts
In the H1 report, Experian said that it now expects organic revenue growth in the range of 4% to 6% and modest margin accretion for the FY2024 — the current financial year.
Analysts are now expecting the world’s largest credit data company to deliver earnings per share of £1.02. This is expected to reach £1.14 in 2025, and then £1.27 in 2026.
Medium and long-term growth will be driven by innovative product offerings, expanding market presence, and strategic partnerships.
The company’s focus on technological advancements and its ability to adapt to changing market dynamics positions it for sustained growth beyond the current fiscal year.
Valuation
So, what does the above mean for the company’s valuation? Currently, it’s clear that Experian isn’t among the cheapest companies on the FTSE 100. It trades at 39.1 times earnings.
2024
2025
2026
EPS
£1.02
£1.14
£1.27
P/E
27.3
24.5
21.9
As we get towards the end of the forecasting period, we can see that Experian is starting to look a little cheaper. But this figure is still substantially above the FTSE 100 average P/E, which is around 14.
One metric that takes into account the growth forecast is the PEG ratio. Experian, according to my calculations, currently has a forward PEG ratio of 3.1.
That’s still not overly cheap as the rule of thumb is that a PEG ratio under one normally suggests a company is undervalued.
Of course, every sector is different. The average forward PEG for the financial sector is 1.21. However, it’s certainly the case that this credit data company has a very different business model and prospects than conventional banks.
Should investors consider buying the shares?
I’m keeping Experian on my watchlist. It’s still looks a little expensive when using the above metrics, even those that take into account the company’s better-than-average growth forecasts. For me, it’s not a screaming ‘buy’.
The post Is the Experian share price screaming ‘buy’? appeared first on The Motley Fool UK.
Should you buy Experian Plc now?
Don’t make any big decisions yet.
Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.
And he believes they could bring spectacular returns over the next decade.
Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows…
When such enormous changes hit a big industry, informed investors can potentially get rich.
So, with his new report, Mark’s aiming to put more investors in this enviable position.
Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!
Grab your FREE Energy recommendation now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
What I learnt about the FTSE 100 in 2023
Is NIO stock cheaper than Tesla today? Here’s what the charts say!
Down 25% this year, this could be the FTSE 250’s best value stock
As the S&P 500 rises higher, I’m buying cheap FTSE 100 stocks
I’d aim for £1m from £446 a month invested in high-yield FTSE shares
James Fox has no positions in any of the companies mentioned. The Motley Fool UK has recommended Experian Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
