Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Experian. We currently have 23 research reports from 4 professional analysts.
In Q2 FY19/20, Experian progressed well on the top-line front – both the B2B and Consumer Services were healthy. Although profitability and cash conversion was poor, management remains confident in bridging the gap in H2 FY19/20. For the full-year, organic revenue growth guidance has been moved towards the higher-end of the previous range. Other targets have been maintained.
Experian’s top-line growth moderated in Q1, largely due to the tough comparable in the‘Decisioning’ segment. Despite this soft start, management remains confident about the business prospects, maintaining its full-year guidance. We will tweak our estimates slightly, but do not expect a material change in the target price.
Experian maintained its strong organic revenue growth momentum in FY18/19. FX headwinds, however, impacted both the reported top-line and profitability. We expect the strong demand of the company’s recently launched products to last, at least in the near term. Positive data regulation in Brazil should also lend some support, in our opinion. We will revise our target price upwards.
The Q3 results came in ahead of our expectations, gaining strength from the robust US performance. Also, the UK provided much-needed support to its topline, led by positive B2B growth and moderating B2C losses. LatAm and EMEA/Asia also remained positive. Moving forward, regulatory risk (dealing with data privacy laws) seems to be the only risk in the US, whereas in the UK, we maintain our cautious stance given Brexit-led uncertainty stretching further. We have revised our estimates upwards. No change in the stock recommendation.
The company’s H1 FY18/19 results were ahead of our estimates. The robust performance of B2B got the much necessary support from B2C. Region-wise – North America grew in double-digits, whereas Brazil and the UK reported a mid single-digit growth. In the upcoming quarters, we expect North America to remain strong, Brazil to improve and Brexit-related winds playing a crucial role in shaping the UK’s performance. We have revised our estimates upwards. No change in the stock recommendation.
The company reported its Q1 FY18/19 results which came in ahead of our estimates. Both North America and EMEA/Asia continued to grow robustly, gaining additional support from Latin America. Despite the uncertain macro-economic environment, the company’s UK and Ireland operations improved further. Furthermore, the permission to operate under an open banking licence opened new pastures for growth. Considering the continuous strength in the US operations and the recovery in the UK region, we have raised our estimates. No change in our stock recommendation.
Experian reported FY17/18 preliminary results in line with our estimates. Although, B2C remained negative on a yoy basis, the quarterly trend showed signs of initial relief (in UK and Ireland, decline moderated on qoq basis, whereas North America turned positive in Q4), providing much needed support for the ongoing positive B2B momentum. Discounting for the higher than expected performance in B2C segment and a robust B2B performance, we have revised our estimates upwards but no change in our recommendation.
Organic growth came in above our estimates but below market consensus. B2B continued to march forward, whereas B2C remained the drag. Geographically, the US was the kernel of company’s growth, gaining support from improving Brazilian economic situation. We maintain our conservative view on US, whereas Brazil remains the strongest pillar in Latin America. In the UK (Consumer Services), Experian’s strategy to monetize its increasing clientele through additional offerings seems to yield favourable initial results. No change in our stock recommendation.
Since Equifax announced a data breach in September 2017, legislators have been trying hard to penalize the lax attitude of data managers (including credit scoring companies). Recently, a bill was tabled in the Senate (Data Breach and Compensation Act), which proposes significant fines in the event of a data breach. Looking into the fine print, the bill recommends a fine of $100 per customer whose personal information gets compromised (with an additional $50 for each piece of data put at risk per person). The total sanctions are capped at 50% of the company’s total gross revenue. Also, if a company fails to disclose the breach to regulators in a timely manner, or has insufficient cyber security in place, the cap will increase to 75%. If this legislation had been in place during the Equifax fiasco, the company would have incurred a fine of at least $1.5bn.
B2B was strong (c.80% of group revenue) but B2C business remained weak. We reiterate our earlier position of a gradual softness in the US economy. We also do not see any long-term benefits from the Equifax fiasco considering a history of customer stickiness (lack of substitutes/limited number of reputed players in the credit scoring business). Although the B2C business is estimated to benefit from a series of small but key steps, it will not return to the black anytime soon. No change in stock recommendation.
Experian reported FY16/17 results in line with our estimates. The lfl revenue growth came in at 4.0% (the same as our estimate; +5% lfl excluding the CCM business), driven by strong momentum in the B2B businesses (+7.0% yoy) – Credit Services (+6% yoy, c.55% of group revenue), Decision Analytics (+9.0%, c.14% of group revenue) and Marketing Services (+8.0%; c.10% of group revenue). However, the B2C business, Consumer Services, witnessed a 4% lfl decline (c.22% of group revenue), largely due to the ongoing transition over the past few quarters. Geographically, North America clocked 5% organic growth (vs our estimate: 4.3%), on the back of positive demand in both Credit and Marketing Services (+8.0% yoy in each segment). The Decision Analytics business remained flat as new-business wins and the strength in scoring and analytics was offset by the non-renewal of a customer contract earlier in the year. Consumer Services ended the year in the red with a 2% lfl decline. UK & Ireland (+1% lfl, c.19% of group revenue) performed in line with our estimates. Growth in B2B businesses (Credit: +3%, Decision Analytics: +5% and Marketing: +5%) was largely offset by the 9% decline in the Consumer business (currently undergoing a transitioning phase), the company has built a free membership base of over 1.7 million members. In the LatAm region (17% of group revenue), the lfl revenue increased by 9.0% (vs our estimate: 7.6%), on account of continued strength from countercyclical products in Credit Services (+6.0% yoy). Marketing and Decision Analytics businesses also registered a positive momentum during the year (+39.0% and +34.0% respectively). Asia Pacific/EMEA (c.8% of group revenue) grew by 9.0% during the year (vs our estimate: 7.4%), driven by the strong performance in Decision Analytics and Marketing services (+21% and +16%, respectively). While Decision Analytics capitalised on new client wins and the strong demand for decisioning and fraud-prevention software, Marketing Services leapt due to good growth in Data Quality and Targeting services. Credit Services declined by 3% due to headwinds in the Nordics and South Africa, partially offset by positive growth in APAC and Southern Europe. The adjusted EBIT margin (excluding the Cross-Channel Marketing business) was 27.7%, up 60bp for the year, reflecting the phasing of investment in strategic growth initiatives and FX tailwinds. The company repurchased shares worth $353m during FY16/17 and announced an interim dividend of $0.415 per share (+4% yoy). Management’s guidance for FY17/18 is for mid single-digit organic revenue growth, capex at 8-9% of revenue and share repurchases of $600m.
Experian reported Q3 FY16/17 results slightly below our estimates. The lfl revenue increased by 4.0% (vs Q2: +5.0%, Q1: +5.0%; our estimate: +5.0%), largely driven by strong growth in credit services (+6.0% yoy; c.50% of group revenue) and the decision analytics business (+10.0% yoy; c.13% of group revenue). North America’s organic revenue growth slowed to 3.0% (vs Q2: +5.2%, Q1: +5.0%; our estimate: +5.5%) due to tougher Q3 FY15/16 comparables in the consumer services business (Q3: -5.0%, Q2: -1.0%). However, this softness was more than offset by good demand for credit services and new contract wins in the marketing services business. Despite ongoing macro headwinds in Brazil, the Latin America region delivered another strong performance during the quarter (Q3: +8.0%, Q2: +5.7%, Q1: +8.0%; vs our estimate: +7.4%). The growth largely emanated from counter-cyclical credit bureau products and increased demand for data and analytics services from large banks and retailers. In the UK & Ireland, organic revenue advanced by 2.0% (vs Q2: +0.6%, Q1: +1.0%; our estimate: +0.1%) as the growth in the services (+5.0% yoy) and decision analytics businesses (+12.0% yoy) was partially offset by a decline in the consumer services business (-12.0% yoy). EMEA/Asia Pacific region clocked lfl revenue growth of 6.0% (vs Q2: +6.7%, Q1: +9.0%; our estimate: +9.0%) on the back of sustained demand for credit decisioning software and fraud prevention services. Fx headwinds (-2% yoy; largely due to weaker GBP vs USD) eclipsed the 2.0% positive scope impact, resulting in total reported revenue growth of 4.0%. On a YTD basis, the company spent $324m on net share repurchases (vs a full year target of $400m). For FY16/17, management guided for mid-single-digit organic revenue growth, stable margins and further progress in the benchmark EPS.
Experian reported H1 FY17 results in line with our estimates. Lfl sales increased by 5% (Q2 FY17: +5%, Q1 FY17: +5%, FY16: +5%; our estimate: +5.2%), largely driven by credit services (+7% yoy; new client wins in US hospitals) and the decision analytics business (+8% yoy; higher demand of fraud and identity management software). North America’s organic revenue was up 5% (vs Q1 FY17: +5%, FY16: +3%; our estimate: +5.8%), once again driven by strong credit services demand from the health vertical. The decision analytics business improved sequentially (Q2 FY17: +7%, Q1 FY17: -1%, Q4 FY16: -8.6%), on the back of new business wins in the financial services and public sector. Despite ongoing macro-economic headwinds, Latin America clocked 5% lfl revenue growth (vs Q1 FY17: +8%, FY16: +7%; our estimate: +6.8%). The demand for counter-cyclical products (particularly delinquency notifications) once again led to resilient growth in credit services (+5%; contributes c.91% of the regional revenue). In the UK, organic revenue growth came in at +1% (vs Q1 FY17: +1%, FY16: +5%; our estimate: +1.5%), largely due to depressed growth in both credit (Q2 FY17: 0%, Q1 FY17: +6%) and consumer services business (Q2 FY17: -9%, Q1 FY17: -1%). EMEA/Asia Pacific delivered another strong performance with lfl revenue growth of 8% (vs Q1 FY17: +9%, FY16: +7%; our estimate: +8.9%), driven by significant new client wins for credit-decisioning software and fraud prevention products. Strong FX headwinds (-2% impact on the top-line; due to weak GBP and BRL vs USD) resulted in the total group’s revenue growth of 3% (vs Q1 FY17: +1%, FY 16: -4%, our estimate: +2.9%). Even with better operating leverage in North America, the group’s EBIT margin came in at 25.7%, -10bp yoy due to higher sales mix of counter-cyclical products (lower margin vs other core products) and investment in growth initiatives across the businesses. The company repurchased shares worth US$79m during H1 FY17 (has plans for further US$321m share buy-back in the H2 FY17) and announced an interim dividend of 13c per share (+4% yoy; payable in January 2017). For FY17, management has guided mid-single digit organic revenue growth and currency headwinds of 2% and 1% on top-line and EBIT, respectively.
Experian reported Q1 FY17 results (three months ending 30 June 2016) broadly in line with our estimates. The lfl sales increased by 5% (vs Q4 16: +6%, Q3 16: +6%; our estimate: +4.8%), largely driven by robust growth in credit services (+8% yoy) and the decision analytics business (+6% yoy). In North America (Q1 17: +5% vs Q4 16: +6%, Q3 16: +6%; our estimates: +4.7%), robust demand from automotive and healthcare clients underpinned the growth in credit services business (Q1 17: +11% vs Q4 16: +12%; Q3 16: +11%, our estimate: +8%). The consumer services business clocked organic growth of 1% (vs Q4 16: +1%; Q3 16: +3%, our estimate: +3%) as the company monetised free traffic (accumulated 4.5 million members since the launch of the free site a year ago) through the cross-selling of membership products and lead generation. Despite ongoing macro-economic headwinds, the LatAm business delivered another strong performance (Q1 17: 8% vs Q4 16: 7.8%, Q3 16: +7%; our estimate: +4.9%) on the back of growth in delinquency notification products and deeper client penetration. Additionally, the company launched the consumer services business in Brazil in July 2016. Organic growth slumped to 1% in the UK (vs Q4 16: +6.5%, Q3 16: +4%; our estimate: +3.9%), pulled down by the sequential slowdown in the consumer services business (-1% yoy; undergoing business transition) and a strong comparative in the decision analytics business (Q1 17: -2% vs Q1 16: +15%). In EMEA/ Asia Pacific, new business wins in decision analytics (+27% yoy) and good demand for cross-channel marketing and data quality services in the marketing business (+11% yoy) resulted in revenue growth of 9% on a lfl basis (Q4 16: +10%, Q3 16: +7%; our estimate: +6.7%). Strong FX headwinds (weak GBP and Brazilian real vs the USD) led the total revenue up 1% (FY 16: -4%, Q3 16: -3%, H1 16: -6%, our estimate: 2.3%). Furthermore, Experian announced the acquisition of CSIdentity Corp., a consumer identity management and fraud detection services provider in the US for $360m (annualised revenue of $103m and $21m EBIT in the year ending March 2016). The acquired entity will be aligned to Experian’s ‘Consumer Services’ business. The company plans to spend $400m on a share repurchase programme in FY17 (vs $592m in FY16). Lastly, management reiterated FY17 guidance of mid-single-digit organic revenue growth and stable margins at constant rates (c. 1% headwind to EBIT, if current exchange rates prevail).
Steve “Woz” Wozniak, infamous co-founder of Apple, was the latest culprit to send shivers across the tech world by claiming Cybersecurity is the greatest threat the world has faced since the atom bomb. Mr Wozniak was alluding to the heightened sense of fear that recent high profile breaches have caused Cybersecurity to be put at the forefront of political, corporate and now it would appear, investor agendas. As the topic gains increasing awareness, it gives rise to a number of companies claiming to be a “thought leader” in the Cybersecurity space, holding the best IP and the best routes to market. With many companies singing from the same loss making hymn sheet it is making it ever difficult to spot the true “Spartacus” from the crowd.
Companies: BA/ BVC BLTG CHRT 9537 CNS DFX ECK EXPN GBG IGP MPAY NCC OSI SCH TERN
Research Tree provides access to ongoing research coverage, media content and regulatory news on Experian. We currently have 23 research reports from 4 professional analysts.
|12Dec19 17:21||RNS||Transaction in Own Shares|
|11Dec19 17:10||RNS||Transaction in Own Shares|
|10Dec19 17:03||RNS||Transaction in Own Shares|
|04Dec19 10:00||RNS||Issue of Notes|
|29Nov19 09:19||RNS||Total Voting Rights|
|20Nov19 09:15||RNS||Additional Listing|
|12Nov19 07:00||RNS||Experian Half-year Report|
Augean has announced the renewal and extension of the Group’s banking facilities and also that it has paid all outstanding and disputed HMRC Landfill Tax assessments totalling £40.4m, including accrued interest. Management reaffirms it will continue to robustly challenge all HMRC assessments based on legal advice that the Group has correctly collected and paid appropriate landfill tax. The HMRC payment allows management to focus on the strategic development of the Group and provides investors with a much cleaner basis for valuation.
Zytronic’s FY19 results (to September) are in line with expectations, confirming a customary improvement in H2 activity. As highlighted previously, a decline in Gaming volumes was the key driver of a 10% decline in Group revenue during the year. There is some near term caution in the statement with trading in the first two months behind the prior year. Our FY20 PBT forecast reduces by 29% as a result. Nevertheless, the pipeline is substantially higher than last year, underpinning medium term confidence. The dividend will no doubt be a focus for investors. This was maintained at 22.8p for the full year (11.8% yield), and the future policy is under consideration by the Board. On our revised forecasts, the shares are trading on 14.5x P/E with £13m net cash.
The H1 20 results were ahead. PBT fell 5% yoy to £24.0m and FD EPS fell 5% to 28.5p due to the non-repeat of the VAT credit in H1 19, although both were 7% ahead of our estimates.
Solid State delivered an 11% pro forma increase in group revenues and a 60% jump in adjusted profit before tax during H120. While some of this increase was attributable to factors such as favourable forex, which management expects will reverse in H220, the group is showing a sustainable benefit from the acquisition of Pacer in November 2018 and a drive to higher margin added-value activities in the Manufacturing division. Management is confident of meeting consensus expectations for the year, which are broadly unchanged since the September upgrade. The shares continue to trade at a substantial discount to peers for prospective P/E.
Companies: Solid State
The arbitration decision splits responsibility for the design information. Trading elsewhere is in line with expectations.
Companies: Costain Group
Driver delivered PBT of £3.0m in FY19 (FY18: £3.8m). Whilst this is a decrease on the prior year, the Group delivered a strong improvement in half on half earnings, with PBT of £2.2m in H2 vs. £0.8m in H1. This improvement was primarily a result of cost savings throughout the second half which should benefit FY20. Importantly, the positive momentum in H2 has continued into the new financial year, with two months of strong trading already achieved. We maintain our FY20 PBT forecast at £3.7m and we would expect a more even H1/H2 weighting. We also introduce an FY21 forecast, which implies continued earnings growth. The balance sheet remains strong (net cash of £5.4m) and, with a promising business pipeline, we expect a return to growth in FY20.
Companies: Driver Group
In the process of upgrading its group-wide ERP system, XP Power suffered some short-term disruptions to shipments from mid-October to mid-November. While shipments have returned to normal levels, the company expects a revenue shortfall of c £6m for FY19, with a consequent impact on earnings. We have revised our FY19 forecasts resulting in a 10.7% reduction in our normalised EPS forecast. As order intake has been robust so far this quarter, we maintain our FY20 estimates.
Companies: XP Power
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP ESRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
discoverIE’s H1 results confirm it is making continued good progress with its strategy to build its design and manufacturing (D&M) business. Underlying organic group revenue growth of 5% was boosted by higher margin acquisitions and the group is fast approaching its mid-term operating margin target. Targeting higher growth markets within D&M and focusing on efficiency in Custom Supply supports ongoing growth in revenues and profitability.
Companies: Discoverie Group
Our Hot Off The Wires daily newsletter takes a look at the morning's market movements, news stories and company announcements. Don't forget to have a go at our daily trivia! Companies mentioned in this edition include: Ashtead, Travis Perkins, Watches of Switzerland, JD Wetherspoon, S&U, McColl's Retail, Hipgnosis Songs Fund, Ted Baker, Premier Foods and OnTheMarket. If you would like to be subscribed, please email us at firstname.lastname@example.org.
Companies: OTMP SUS TPK
Interim results in line with expectations with 24% revenue growth, and strength at key accounts. We leave our full year earnings estimates unchanged and continue to expect FY20 FD EPS of 7.6p.
Companies: Mind Gym
The organic growth rate and progress seen in the interim period is underpinned by the meaningful contracts signed over the last couple of years. The stock price rise is beginning to discount this growing momentum and we see further upside potential for the share price from multiple expansion and continued organic earnings growth.
Companies: Vianet Group
The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.
Companies: AVO AJB AGY ARBB BUR CLIG DNL DPP FLTA GTLY GDR MCL MUR NSF PCA PIN ESRE PHP RE/ RECI RMDL STX SCE TON SHED VTA W7L