15th May 2024 11:49
(Alliance News) - Experian PLC is "ticking all the boxes" after predicting further strong organic growth and improved margins amid a hefty jump in annual profit.
In an upbeat statement on Wednesday, alongside results for the year to March, the Dublin-based consumer credit checker said full-year growth "was at the top end of our expectations."
Shares in Experian rose 7.4% to 3,728.00 pence in London on Wednesday.
Experian said pretax profit in the year ended March 31 jumped 32% to USD1.55 billion from USD1.17 billion a year prior.
Revenue rose 7.3% to USD7.10 billion from USD6.62 billion a year earlier. Basic earnings per share rose 56% to 131.3 US cents from 84.2 cents.
Reflecting the strong performance, Experian upped its full year dividend by 7% to 58.50 cents from 54.75 cents.
Chief Executive Brian Cassin predicted further progress ahead.
"For [financial 2025], we expect further strategic progress and expect to deliver organic revenue growth in the range of 6-8%. We also expect good margin expansion, in the range of 30-50 basis points, at constant currency."
"Looking further ahead, we expect the combination of economic recovery, continued new product and vertical market expansion as well as productivity gains from technology cloud transition to elevate our financial performance. We anticipate strong organic revenue growth, good margin accretion and reduced levels of capital expenditure."
Experian noted growth improved as the year progressed, with fourth quarter organic growth of 8%, resulting in 6% for the full year.
Matt Britzman, equity analyst, Hargreaves Lansdown said the "credit giant" is "ticking all the boxes."
"A strong final quarter capped off a good year, and investors should be happy with guidance that points to further top-line growth and improving margins," he added.
He thinks the mix of business and consumer products is "key," with free users providing a "treasure trove" of data for Experian to leverage.
"In this modern age of [artificial intelligence], data is king," he remarked.
"AI is already being integrated into products, and there's plenty of scope to do more. The valuation isn't cheap, but you're paying for quality with Experian. That's more than justified given the combination of sector-leading returns and growth opportunities on the horizon," he commented.
Analysts at Bank of America noted Experian has for the first-time announced a mid-term financial organic growth target of high single digits, broadly in line with consensus, led by higher contribution from new and scaling products, better customer engagement in Consumer Products, and adoption of integrated platforms in business to business.
More importantly, BofA felt it addressed a key investor concern on limited operating leverage by announcing a strong margin progression of 30 to 50 basis points per annum in the mid-term, up from 10 to 30 bps per annum previously.
"We see this as feasible, given decreasing dual running costs as Experian is making good progress with its technology transition, and is successfully building scale in Consumer Services," BofA said.
BofA reiterated a 'buy' rating on Experian and raised its share price target by 5.4% to 3,900p from 3,700p before.
By Jeremy Cutler, Alliance News reporter
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