Should I Buy Experian?

LONDON -- I'm shopping for shares again, and I'm anxious to get to the check out. Should I pop Experian (LSE: EXPN  )  into my basket?

Are you Experian-ced?
Global information services company Experian is best known for its credit-checking service, but that's only the consumer tip of a global business iceberg that includes telecoms, debt collection, fraud prevention, targeted marketing, and the public sector. Experian has plenty of data on us, but now it's my turn to check its numbers. Should I buy it?

Experian is a fine example of a company that has taken its area of niche expertise and steadily widened it to cover more and more areas. It has just continued this strategy by acquiring Decisioning Solutions, which helps smaller U.S. and Canadian financial and telecommunications firms manage customer acquisitions and loan originations. It is also expanding its existing services into new territories, launching a consumer credit bureau in Australia in February. Experian now operates 19 bureaus around the world, with a big presence in the U.S. and Brazil.

Pacific depths
Experian's third-quarter interim statement, covering the three months to 31 December, showed impressive 11% growth in Latin American revenues, with Colombia and Peru performing strongly. I am pleased to see revenues holding up troubled territories such as the U.K. and Ireland, rising 8%, beating the U.S. at 7%. Experian is struggling to make headway in Asia-Pacific, which is surprising, given that this is a happy hunting ground for so many FTSE 100 companies right now. Management predicted high single-digit organic growth for the full year.

Growth through acquisition is part of its strategy. Experian bought the remaining stake in Brazilian credit specialists Serasa in November for $1.5 billion and has made several recent bolt-on acquisitions, mostly pain cash. The company depends on strong credit growth for much of its profits, so you might expect it to have struggled since the financial crisis, but reality has seen quite the reverse. The share price has risen 220% over the past five years, and 20% this calendar year alone. Its dominant market position helps, with high barriers to new entrants. Although it did suffer one major disappointment last year, after the sale of its non-core PriceGrabber service to Ybrant Digital fell through.

Put it down to Experian
Operating margins are comfortable, at more than 23%. Strong share price growth has suppressed the yield, which is currently a humdrum 1.8%, some way below the FTSE average of 3.2%. You can tell how much the market rates this stock by checking out its valuation, a bullish 22 times earnings, against 15 for the index as a whole. This reflects forecast earnings-per-share growth of a healthy 21% in the year to March 2014, followed by another 10% to March 2015, which should push the yield up to 2.4%. JPMorgan recently upped its target price from 12.10 pounds to 13.47 pounds and confirmed its overweight rating. Right now, 12 out of 18 brokers rate it a strong buy (another three rate it a buy). It isn't difficult to see why.

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