EUR 850.00 For Business Accounts Only

Morningstar | Experian Maintains Strong Growth at Its Fiscal Year-End

Experian finished its fiscal year on a good note, with full-year revenue, excluding currency impacts and acquisitions, up 9% year over year, a bit ahead of our long-term expectation of 6%-7% growth. Still, results were roughly in line with our expectations, and we will maintain our GBP 1,940 fair value estimate and wide moat rating.

North American results were impressive, with this region producing 10% year-over-year growth for the year, excluding currency impacts and acquisitions. Experian appears to have largely offset the fall-off in mortgage activity that has slowed growth for its peers, which suggests the company is successfully executing on new product rollouts. We’re also pleased to see the consumer business maintain its momentum, with a 9% growth rate. Experian’s strategy in this area of building its own consumer offerings, instead of partnering with companies like Credit Karma, differs from peers, and recent results suggest this move is starting to pay off. In the long run, we think this course should have more benefits, as Experian will control consumer relationships.

Growth in Latin America was less impressive, with this region seeing 6% year-over-year growth for the year, excluding currency impacts and acquisitions. The macroeconomic backdrop in this region has been an issue, although management suggests that the pressures are easing. In the long run, we still believe that replicating the company’s business model in emerging markets is the most value-creative growth opportunity for Experian and its peers. Growth of 14% on the same basis in the EMEA/Asia-Pacific region shows that the company is seeing success in some areas.

Growth in the U.K. and Ireland was more modest, with 4% year-over-year growth for the year, excluding currency impacts and acquisitions. This region is still being held back by a decline in the consumer business, which was down 4%. However, this region is in an earlier stage of transition, and the company’s success in restoring growth in North America inspires confidence that management can get this business back on track.

Adjusted operating margins for the year came in at 26.9%, compared with 27.1% last year, as improvement in North America was offset by modest decline in the other regions. Over time, we continue to believe that the scalable nature of Experian’s business model will allow for modest but sustainable margin improvement.