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Experian exhibits steady financial performance with industry-aligned ROCE

EditorHari Govind
Published 05/11/2023, 16:20
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EXPN
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Experian (OTC:EXPGF), a global leader in consumer and business credit reporting and marketing services, has demonstrated a commendable Return on Capital Employed (ROCE) trend, a key indicator of effective reinvestment strategies and potential return prospects. The company's consistent financial performance is in line with the Professional Services industry, fueling expectations of steady share price returns for long-term investors.

ROCE, a critical metric used to evaluate a company's annual pre-tax profit against its capital employed, is defined as Earnings Before Interest and Taxes (EBIT) divided by (Total Assets - Current Liabilities). Experian's ROCE stands at 18%, aligning closely with the Professional Services industry average of 15%. This alignment signifies stability in the firm's financial performance relative to its industry peers.

Over the past five years, Experian has increased its capital employment by 58%, consistently achieving an 18% return. While not extraordinary, such consistency is a promising sign for investors seeking stable returns over the long term. The ability to maintain a steady ROCE amid substantial capital employment growth suggests an effective management of resources and robust financial health.

Spotting potential multi-bagger stocks often involves vigilance over key trends like growing ROCE and expanding capital employed. In this regard, Experian serves as an illustrative case study for investors eyeing stable financial performance and potential return possibilities.

InvestingPro Insights

In line with the article's focus on Experian's commendable return on capital employed (ROCE) trend, the InvestingPro data and tips further support the company's strong financial performance.

InvestingPro data reveals that as of Q4 2023, Experian has a market capitalization of 29,844.47 million USD and a P/E ratio of 38.78, indicating a high earnings multiple. In addition, the company has shown a revenue growth of 5.26% over the last twelve months, reaching a total revenue of 6619 million USD.

Two InvestingPro tips particularly relevant to the article are: Experian yields a high return on invested capital, and its stockholders receive high returns on book equity. These tips reinforce the article's emphasis on the company's effective reinvestment strategies and potential return prospects.

For a broader perspective and additional tips on Experian and other companies, readers can check out the InvestingPro platform, which offers a wealth of real-time data and expert tips. Currently, InvestingPro lists a total of 12 tips for Experian, offering deeper insights into the company's financial health and performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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