As the FTSE 100 hits 10,000 for the first time, is it time to consider buying the stock that manages the index?

On Friday (2 January), the FTSE 100 broke through the 10,000-barrier. James Beard considers the prospects for the company that’s responsible for the index.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Bus waiting in front of the London Stock Exchange on a sunny day.

Image source: Getty Images

History was made yesterday (2 January), when the FTSE 100 index reached five figures. Having been launched with a value of 1,000 on 3 January 1984, it’s taken 15,371 days to get there. But as the table below shows, the move from 9,000 to 10,000 has been the fastest ever 1,000-point increase.

MilestoneDate achievedDays to reach milestone
1,0003.1.84At launch
2,0004.3.871,156
3,00011.8.932,352
4,0002.10.961,148
5,0006.8.97308
6,00023.3.98229
7,00020.3.156,206
8,00016.2.232,890
9,00015.7.25880
10,0002.1.26202
Source: various newspaper reports

The running of the index is overseen by the London Stock Exchange Group (LSE:LSEG). And with the FTSE 100 seemingly enjoying a bit of a rally at the moment, is it time to consider buying the company’s stock? Let’s take a look.

What else does it do?

The group’s about more than the London exchange. It has five business divisions with exposure to various aspects of financial markets.

  • Data & Analytics – financial data and analytics
  • FTSE Russell – benchmark data and indexes
  • Risk Intelligence – customer and third-party risk solutions
  • Capital Markets – capital raising and trading venues in multiple asset classes
  • Post Trade – clearing, risk management and capital optimisation solutions

The biggest — Data & Analytics — contributed 51% towards the group’s revenue in 2024, and 37% of adjusted operating profit.

Importantly, the group has a truly global reach. Its services are used by approximately 44,000 customers in over 170 countries.

Like many technology companies, the group’s able to achieve an impressive gross profit margin. In 2024, it was 86.8%. This reflects the fact that the marginal cost of providing its services to a new customer is relatively low. It also indicates that the group’s in a position to charge a premium price for its products.

And like a number of others in the tech sector, its shares command an above-average price-to-earnings (P/E) ratio. Analysts are forecasting earnings per share of 415.8p for 2025. If correct, it implies a forward P/E ratio of 21.5. Looking ahead to 2027, the figure drops to a reasonable 17.3.

The impact of artificial intelligence

However, the group faces some challenges. As a provider of specialist services, the pool of potential new customers could be fairly limited. Also, the emergence of artificial intelligence (AI) solutions could make it easier for rivals to replicate its data services at a far lower cost.

And it remains vulnerable to a cyber attack. Indeed, in its 2024 annual report, the group warned that it “may not always be possible” to prevent such an incident.

Despite these risks, I think the group’s stock is worth considering further. Like many UK-listed companies, it’s built a worldwide presence and established an excellent reputation. Data, which has been described as the “new oil”, is big business at the moment. After all, AI models need data. And the London Stock Exchange Group has plenty of it.

Indeed, I can’t see any obvious sign that AI’s damaging its business. Of course, this might change. But the group views the technology as a means of enabling operational efficiencies and to “enhance customer propositions”. At the moment, it’s not viewed as too much of a threat.

And while I don’t believe the company’s stock is cheap, it doesn’t look to be overly expensive. On this basis, I think it’s one to consider, irrespective of how the FTSE 100 performs over the coming months and years.

James Beard has no position in any of the shares mentioned. The Motley Fool UK has recommended London Stock Exchange Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

British pound data
Investing Articles

The red lights are flashing again for Lloyds’ share price! Here’s why

Lloyds' share price continues to defy gravity. But Royston Wild thinks it's only a matter of time before the FTSE…

Read more »

Aston Martin DBX - rear pic of trunk
Investing Articles

Aston Martin shares are now only 41p!

Aston Martin shares just dropped to around the 41p mark! Is this a brilliant buying opportunity or a stock that…

Read more »

Artillery rocket system aimed to the sky and soldiers at sunset.
Investing Articles

Up 325% in 5 years! But are BAE System shares still a no-brainer buy?

BAE Systems shares would have been a brilliant buy five years ago. But could they still offer excellent returns if…

Read more »

Investing Articles

How much do you need to invest each month into FTSE 100 shares to aim for a million?

Simply by putting a few hundred pounds a month into FTSE 100 shares, how might someone aim to become a…

Read more »

Close-up as a woman counts out modern British banknotes.
Investing Articles

£10,000 invested in BAE shares at the beginning of 2026 is now worth…

Paul Summers tips his hat to those who invested in BAE Systems shares when markets opened back up in January.…

Read more »

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

What size ISA do you need for £250-a-week retirement income?

Harvey Jones outlines the advantages of investing in a Stocks and Shares ISA rather than leaving money in cash, and…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

£5,000 invested in Legal & General shares 5 years ago is now worth…

Harvey Jones crunches the numbers to show how much an investor would have earned from Legal & General shares lately,…

Read more »

Investing Articles

Just check out the latest bumper forecasts for Lloyds, NatWest and Barclays shares

Harvey Jones says Barclays shares have had a terrific year and there could be more action to come. So what's…

Read more »