The Experian (LSE: EXPN) share price continued marching higher today (16 January). As I write, it’s up 2.4% to £32 after the credit data firm posted a robust Q3 trading update.
This means the share price has climbed around 8.5% in one year and 64.5% over five years. Needless to say, this walks all over the FTSE 100‘s returns across the same periods.
Can this outperformance continue this year?
Trading update
Experian is the biggest credit bureau in the world and therefore has a truly global presence. This does mean there’s often one region taking off, a couple ticking along nicely and one where there’s weakness.
However, in the Q3 results (covering the three months to 31 December), year-on-year organic growth at constant exchange rates grew in all four main regions.
| Total revenue growth (%) | Organic revenue growth (%) | |
| North America | 6 | 5 |
| Latin America | 17 | 13 |
| UK and Ireland | 3 | 3 |
| EMEA and Asia Pacific | 8 | 7 |
| Global total | 7 | 6 |
As a result, Experian upgraded its full-year (the 12 months to March) organic revenue growth guidance to 5%-6%, up from 4%-6%. Around $7bn. Meanwhile, it expects “modest accretion” to its profit margins.
Powerful data and optionality
The company possesses a mind-boggling amount of business and consumer credit data. It uses this to provide information services, analytics, and decision-making tools related to credit reporting, marketing, and identity verification.
When I think of where the world is heading, with data right at the centre of it, these areas should only grow in importance. And therefore Experian too, I’d imagine.
Fund manager Nick Train, who holds the stock in his Finsbury Growth & Income Trust, recently said: “Experian has, arguably, the biggest collection of data on businesses and consumers on the planet and, as the company says, almost more opportunities to create new services from that data than it can deal with.”
In the quarter, we saw Experian’s incredible optionality at work. There was volume weakness in smaller fintechs and mortgages in North America but this was offset by strong growth in automotive and consumer services.
In Latin America, its agribusiness vertical did well while its debt resolution service grew in Brazil. Elsewhere, there was strong progress in Australia, India and Italy.
Put simply, this optionality means the company has many ways to win.
I’ve made a mistake
Writing this makes me think I made a huge error selling the stock last year. What on earth was I thinking?
Well, basically I wanted to add shares of RELX and London Stock Exchange Group to my portfolio. These are two other world-class FTSE 100 data companies.
So I invested in Finsbury Growth & Income Trust, which has these three stocks at the top of its portfolio.
Unfortunately, that hasn’t worked out too well so far. Experian is up 16% since I sold, while Finsbury is down around 4%.
I may invest in Experian again, but it can be psychologically galling to buy back in at a higher price. Especially when the forward price-to-earnings (P/E) ratio of 27 might present valuation risk for me.
Sadly then, I’m left monitoring for a share price dip. And after today’s full-year guidance upgrade, I’m not expecting one.
On the contrary, Experian may well power higher and outperform the FTSE 100.
