Shares in credit scoring software firm Experian (EXPN) fell to a 2-year low despite a seemingly positive trading update. The shares fell as much as 216p or 6.7% to £30.11, taking out their April 2025 low in the process.
| Share price: £30.65 (-5%) | PE: 27.7x |
| Market Cap: £27.9bn | Yield: 1.5% |
FORECASTS UNCHANGED
The company, whose products help banks and credit card firms improve their loan quality, said Q3 trading met its expectations. For the three months to 31 December, group revenue was up 8% organically and 12% at current exchange rates.
Growth in North America was strong at 11%, while Latin America outperformed with a 25% jump in revenue. The UK & Ireland and EMEA/Asia Pacific were more measured with 9% and 7% growth respectively.
By business area, North American growth came from both B2B and Consumer, whereas other regions saw little or no growth in B2B. North America represents 68% of group revenue, while Latin America, UK & Ireland and EMEA/Asia Pacific make up the rest.
‘With continued strong momentum, our full year expectations are unchanged’, commented chief executive Brian Cassin. ‘We continue to leverage our scaled proprietary data assets, strong technology and deep expertise to deliver on our strategic priorities.’
Our sense from the market’s reaction to today’s update is investors were looking for Experian to raise guidance. Failure to meet those expectations has sent the stock price to a 2-year low.
In his statement, the CEO referred to ‘crystallising exciting new AI opportunities’, but there were no details. We suspect that actually, deep down, the market is concerned AI will cannibalise Experian’s business, not help it.
The stock happens to be another of Nick Train’s favourites and is the second largest holding in Finsbury Growth & Income (FGT). At 11.6%, the stock is only marginally smaller than accounting software firm Sage (SGE) which is 12% of the portfolio.
Read the Experian press release here: https://www.experianplc.com/
Read related news here: https://sharesify.com/finsbury-growth-income-still-lagging/
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