I’ve never looked at Euromoney International Investor (LSE: ERM) before, even though the firm is listed in the FTSE 250 index with a market capitalisation around £1.35bn. It’s certainly no tiddler, and there’s a lot to like about its financial figures, including a strong showing on quality metrics, a reasonable valuation and a growing dividend.
The company provides pricing, research, data and other business-to-business services focusing on the global financial community in the areas of asset management, banking & finance, commodities events, and pricing, data and market intelligence. Its brands include Euromoney, Institutional Investor, BCA Research and Metal Bulletin.
An encouraging update
I find today’s AGM trading statement to be encouraging. During the last three months of 2018, trading was “in line with board expectations.” Underlying revenue came in 1% higher compared to the equivalent period the year before. Within that figure, underlying subscription revenue rose 1%, and 9% growth in the Pricing, Data and Market Intelligence segment “more than offset”a 4% slide from activities in the Asset Management segment. Meanwhile, the Events segment grew 3%.
City analysts expect revenue to increase by 2.9% for the full year to September 2019 and for earnings to decline by 8%. However, the company disposed of its Global Markets Intelligence Division in April 2018, which makes earnings comparisons less useful than they might have otherwise been. The forecast is for a 6% rebound in earnings during 2020.
I like the apparent strength of the balance sheet, and net cash stood at almost £94m on 31 December, up almost 20% from 30 September. The directors explained in the report that the increase occurred because of proceeds of £20m received from the sale of a business and because of “continued strong operating cash flow.” Cash gains were offset by a one-off withholding tax payment and because of payments made on the completion of two acquisitions.
Strategy progressing well
Overall, the directors said that the strategy is “progressing well,” and there is “increasing recognition” of the firm’s pricing products. On top of that, restructuring in the asset management segment is complete. We can find out more with the interim results report, which is due on 16 May.
At today’s share price close to 1,264p, the forward-looking earnings multiple sits just below 16 for the trading year to September 2020 and the anticipated dividend yield is just over 2.6%. Those expected earnings should cover the dividend around 2.4 times. I think the valuation looks fair, but the main attraction for me is that the dividend has increased by 42% over the past five years and that kind of growth looks set to continue.
I think the ongoing growth potential makes Euromoney International Investor one for me to keep an eye on and I’d be keen to revisit the shares on dips and down-days with a view to picking up a few as part of my balanced and diversified portfolio.
