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Experian plc (LON:EXPN): What Does The Future Look Like?

Simply Wall St

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The latest earnings announcement Experian plc (LON:EXPN) released in June 2019 suggested that the business endured a substantial headwind with earnings declining by -15%. Investors may find it useful to understand how market analysts view Experian's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Experian

Analysts' outlook for this coming year seems optimistic, with earnings expanding by a robust 25%. This growth seems to continue into the following year with rates reaching double digit 40% compared to today’s earnings, and finally hitting US$1.0b by 2022.

LSE:EXPN Past and Future Earnings, July 2nd 2019

Although it’s useful to be aware of the growth each year relative to today’s level, it may be more insightful to determine the rate at which the business is moving every year, on average. The pro of this approach is that we can get a better picture of the direction of Experian's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can anticipate Experian will grow its earnings by 13% every year for the next few years.

Next Steps:

For Experian, I've compiled three pertinent factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is EXPN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EXPN is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EXPN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.