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Informa - Falling debt should lead to re-rating

April 2012

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • INF
  • Price:
  • 444p
Over the past four years Informa has tweaked its structure to enable it to perform better in tougher times, with marginal revenue streams eliminated from its publishing side and “a few thousand smaller conferences and training courses†removed from the Events portfolio. While this limits some upside should another boom suddenly erupt, it also improves the quality of earnings and explains why full year 2011 revenues of £1.28bn, which are back to the heights reached in 2008, also generated a significantly higher operating margin of 26.4% (2008: 23.9%). This translated into a 7% increase in pretax profit to £296m, while eps rose 8.6% to 37.8p. Strong cash flow meant that net debt to ebitda fell from 2.3 to 2.1 times in spite of ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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