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With £1,000, I’d buy this FTSE 100 share based on today’s news

The market likes today’s half-year report from global information services company Experian (LSE: EXPN) and the share price is up around 5% as I write. The FTSE 100 stalwart operates as a consumer credit reporting agency, collecting and aggregating information on millions of people and businesses. It also provides decision analytics and marketing assistance to businesses. Over the past five years, revenue has been essentially flat, but normalised earnings increased around 260%, the dividend rose 29% and the share price shot up 65% or so.

Decent figures

I find today’s figures encouraging. In terms of constant currency, revenue rose 9% compared to the equivalent period last year and adjusted earnings per share lifted 12%. The directors expressed their confidence in the outlook by pushing up the interim dividend by 4%. Meanwhile, chief executive Brian Cassin explained in the report that the trading year “started well” and pointed out that 8% of the growth in revenue was derived organically, which I think suggests the firm’s offering is resonating with its customers. Cassin puts the progress down to Experian expanding its data assets, and that it has introduced new global products and gained momentum in its Consumer Services division.

The really positive news that excites me about Experian now is that the directors expect the full-year organic revenue growth to be in line with the first half, which means it will be at “the top” of their previous guidance range. Cassin coloured in the forecast by saying that the company expects an ongoing headwind from foreign exchange translation, but earnings before interest and tax (EBIT) will likely grow “at or above revenue growth.” He thinks there will be strong progress with constant currency adjusted earnings per share during the rest of the year.

‘Hidden’ growth regions set to emerge

City analysts following the firm expect growth in earnings to nudge into double figures for the trading year ending March 2020, at around 11%. And yearly growth in earnings has been a strong feature of the firm’s trading record over the years. Indeed, data and information are big business in today’s digital world and I see the firm as well placed to thrive and grow from where it is now. The company already enjoys a robust international presence. In the first six months of its trading year around 60% of revenue derived from North America, 17% from the UK and Ireland, 14% from Latin America and 9% from Europe, the Middle East, Africa (EMEA) and the Asia Pacific region.

The USA is very important to Experian and the firm earned around 72% of its EBIT from the region in the first half of the trading year. The UK and Ireland contributed 15%, Latin America 14% and there was an EBIT loss of 9% from EMEA and the Asia Pacific. However, the US and EMEA/Asia Pacific are the fastest-growing regions for Experian in terms of revenue. I think EMEA/Asia Pacific could prove to be a good earner for the company once operations have reached critical mass in the region.

Overall, I reckon Experian has decent growth drivers within its business and I’d be happy to buy some of the firm’s shares and hold them for the next decade with the expectancy of a decent total return on my investment. 

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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.