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Credit checker Experian revealed this month that its third-quarter performance was “at the upper end of expectations”. This means that full-year organic revenue growth will be strong at 5-6 per cent, with “modest margin accretion” also expected.
Latin America, specifically Brazil, remains the most dynamic region, but Experian’s core market of North America is also robust — despite a slowdown in the mortgage division.
The group’s share price has been on a bumpier journey. Tighter credit markets weighed on shares in the first half of 2023, and a profit warning from US rival TransUnion spooked investors in October. But shares are up by 8 per cent year-on-year and they have jumped by almost a third since November.
Chief operating officer Craig Boundy has made the most of this bounce, selling 226,166 shares for over £7.2mn on January 16. Boundy was appointed to the board in July 2022, after heading the North America division for seven years.
Experian provided no reason for the sale, but investors might be wondering whether shares have peaked. All eyes are certainly on full-year 2025, which begins in April. Analysts are currently forecasting organic growth of 7 per cent, a step up from 2024 levels. Experian’s valuation also reflects its strong growth prospects; it is trading on a forward price/earnings ratio of 26x, up from 22x in November. If growth does stall, therefore, the market reaction could be significant.
Data insight is a defensive industry, however, and Experian has navigated the difficult lending environment with ease so far. Despite investor concerns, both the business-to-business and consumer divisions have held up well, and new products have kept demand high, despite tough underlying markets.
Experian is due to publish its results for the year ended March 31 on May 15.
Tatton chief switches asset mix
Tatton Asset Management has been one of the few real success stories to come out of the mid-size asset management market in the past few years. The company specialises in standardised model portfolios that independent financial advisers (IFAs) can use to administer client money.
The deal saves the IFA the time and regulatory effort needed to run funds themselves, while Tatton accesses a large retail market where the ebb and flow of funds is less critical than for active managers.
Tatton consistently posted monthly net inflows of £150mn throughout 2023.
Consequently, the shares had an excellent year, up 17 per cent for the 12 months, so it comes as no real surprise that Tatton chief executive Paul Hogarth has taken the opportunity to sell a decent chunk. Hogarth sold 331,531 shares at an average price of 529p, for £1.75mn. Despite the sale, Hogarth still holds 15 per cent of the company’s shares.
How the company performs this year will be closely watched by the market. Investors will be looking for signs of whether competition in the model portfolio market has started to have any measurable impact; competitors such as Abrdn and Schroders have their own model portfolio offerings.
In valuation terms, Tatton is at the very top of the asset management sector, with broker Peel Hunt valuing the shares at 25 times forecast earnings for this year.