In the dynamic world of media and events, one FTSE 100 company appears to be in a strong position to succeed over the coming years. Informa (LSE:INF), an international events, digital services, and academic research company, has seen its shares climb steadily over the last year. So is this one to watch?
The valuation
A discounted cash flow (DCF) calculation suggests that Informa may be trading at a healthy discount to its fair value – potentially up to 42% below estimates. This revelation comes as the company’s stock has already demonstrated impressive performance. It delivered a 14.4% return over the past year and outpaced both its industry peers and the broader FTSE 100.
The firm’s recent performance has been nothing short of remarkable. The company reported a staggering 203% increase in earnings over the past year, showcasing its ability to capitalise on the post-pandemic recovery in the events and media sectors. This substantial growth demonstrates resilience and adaptability in navigating challenging market conditions.
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Looking ahead, the future appears bright for Informa. Analysts forecast earnings to grow by 11.37% per year, indicating continued momentum and expansion opportunities. This positive outlook is further bolstered by the company’s recent strategic moves, including a conditional proposal to acquire Ascential for £1.2bn. This ambitious move signals intent to strengthen its market position and expand its portfolio of offerings.
Financial strength
Financially, Informa stands on solid ground. The company boasts a track record of financial stability with a solid balance sheet, providing a strong foundation for future growth initiatives and flexibility to grow. This positions the business well to pursue opportunities and weather potential market uncertainties, which competition may struggle with.
However, it’s important to note that Informa isn’t without its challenges. The company has an unstable dividend track record, which may be a concern for income-focused investors. Additionally, operating in the ever-evolving events and media industry requires constant innovation and adaptation to stay competitive. Any change in the state of the economy, or disappointment with dividend payments could see investors taking profits.
As management prepares for the future, investors will be keen to see if the company can maintain its impressive growth trajectory. With a diverse portfolio spanning events, digital services, and academic research, the firm seems well-positioned to capitalise on the ongoing digital transformation and in-person events. The company’s ability to straddle both digital and physical realms gives it a unique advantage in an increasingly hybrid world.
One for the watchlist
The burning question remains: will the market soon wake up to this potentially undervalued sleeping giant in the FTSE 100? I think that Informa’s strong performance, positive growth prospects, and strategic initiatives make a pretty compelling case. I’ll be adding it to my watchlist for now.
