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.
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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’.
