Why credit check firm Ex­pe­rian should be in your port­fo­lio

Data is be­ing her­alded as the new cur­rency and this stock is cen­tral to the theme

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While fret­ting about your credit score, take a mo­ment to think about the com­pa­nies that hold the in­for­ma­tion. Ex­pe­rian (EXPN) is one of the largest.

Even with the emer­gence of free to use credit rat­ing com­pa­nies (Ex­pe­rian now also pro­vides such a ser­vice) this com­pany has been grow­ing at a steady click.

We be­lieve there is fur­ther for this com­pany to go as it has a vast ge­o­graph­i­cal foot­print, op­er­ates in 37 coun­tries and of­fers cru­cial ser­vices to clients in­clud­ing the UK Govern­ment.

DATA IN DE­MAND

When lis­ten­ing to busi­ness lead­ers, as­set man­agers and bank­ing ex­ec­u­tives, they of­ten say that data is the new cur­rency. If this is the case, then Ex­pe­rian is a great play on this trend as it col­lates and uses data in a va­ri­ety of ways.

The com­pany helps busi­nesses make de­ci­sions about their cus­tomers by pro­vid­ing fi­nan­cial in­for­ma­tion to de­ter­mine their cred­it­wor­thi­ness. For in­di­vid­u­als, it can help pro­tect against fraud and iden­tity theft.

Robin Speak­man, an­a­lyst at bro­ker Shore Cap­i­tal, says the core driver of its strong 2018 re­sults was ‘the strength in de­mand for data based ser­vices from the group’s wide va­ri­ety of clients across all re­gions’.

For the 12 months to the 31 March 2018, the com­pany in­creased its rev­enue by 5.7% to $4.58bn and ad­justed pre-tax prof­its by 3.4% to $1.2bn. These re­sults were ‘slightly above’ Speak­man’s fore­casts and he now pre­dicts a 6.5% in­crease in Ex­pe­rian’s 2019’s ad­justed pre­tax prof­its to $1.24bn.

LOWER RISK GROWTH

Ex­pe­rian is highly liq­uid with a cop­per-bot­tomed balance sheet. Its first quar­ter trad­ing up­date re­leased on 13 July showed or­ganic rev­enue growth of 8% for the whole com­pany.

This was led by both its North Amer­i­can and EMEA/ Asia Pa­cific busi­nesses where both re­gions ex­pe­ri­enced or­ganic rev­enue growth of 11% where new con­tracts were the driv­ing force.

This growth rate was brought down by the UK and Ire­land only hit­ting 3% and Latin Amer­ica where Brazil’s eco­nomic woes im­pacted the growth of the busi­ness.

GO­ING FOR­WARD

Aside from or­ganic growth, Ex­pe­rian is also on the ac­qui­si­tion trail with ClearS­core in the UK be­ing one of its main tar­gets.

For a qual­ity com­pany with this much growth po­ten­tial, a mul­ti­ple of 20.1-times 2019’s $1.02 of earn­ings looks at­trac­tive.

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