Castlefield Stock Story - Experian
Christmas is almost upon us and people bracing themselves for some big spending over the festive period might want check their credit report before splashing out. That’s a job for Experian.
Castlefield Investment Analyst David Gorman introduces the Dublin-based credit scoring data and technology business in this featured stock story.
Christmas is almost upon us and those who are bracing themselves for some heavy spending over the festive period might want check their credit report and credit score before making any big financial commitments. 89 percent of American consumers are tempted to spend more than they should over the 2024 festive period covering Thanksgiving and Christmas.[1]
A credit report is a record of a person’s financial history and current obligations, from debts owed to bill payments made and one of the best places to check your file is Experian. The company is a global leader in credit scoring, although this is only part of what the company does. It’s a global business and, although based in Dublin, is one of Britain’s largest companies.
We own Experian shares in our UK Opportunities Fund. The company also has a connection with Castlefield’s hometown of Manchester in that it was formerly part of Great Universal Stores (GUS), something of a North West institution. Experian demerged from GUS in 2006.[2]
although based in Dublin, [Experian] is one of Britain’s largest companies
Experian is a data and technology company operating through two segments, Business-to-Business and Consumer Services. The company aggregates and processes information from various sources to provide a range of data-driven services. It also owns, creates and develops business analytics, predictive tools, sophisticated software and platforms. Experian also provide clients with insights into credit risk, fraud prevention, identity management, customer service and engagement, account processing and account management services alongside data analysis and R&D services.
It serves customers in financial service, direct-to-consumer, health, retail, software and professional services, automotive, insurance, media and technology, telecommunications and utilities as well as government and public sectors. The company earns two-thirds of its revenue in North America.[3]
What we especially like about Experian is the work it does to support financial inclusion. Access to fair and affordable credit can help people get a college degree, buy a car or a house, start or expand a business and establish careers, build wealth and achieve greater financial success.
106 million American consumers currently cannot obtain credit at mainstream rates because they are “credit invisible,” not scoreable by conventional credit scores, or have a poor credit score. Experian’s research shows that by including information such as rental payments, utility information and advanced data analytics in their decisioning, lenders can improve access to credit for nearly 50 million of these individuals and families.[4] This year, the company launched Cashflow Attributes™, a software tool which supports financial institutions to make more nuanced lending decisions, allowing lenders to drive revenue growth and mitigate their risk while still offering more customers fair and affordable access to credit.
106 million American consumers currently cannot obtain credit at mainstream rates
Experian puts people in control of their own financial wellbeing, providing credit education, free access to Experian credit reports and scores and online educational tools. Over 180 million people are signed up to its various free services.[5] These services include a marketplace, similar to Money Supermarket, another company whose share we own, where consumers can shop around for the best deals for things like insurance or credit cards.
As well as increasing sales from existing businesses, Experian has made numerous acquisitions over the years. 2024 purchases include companies operating in fraud prevention and identity management.
Experian puts people in control of their own financial wellbeing
Recently, the company published a pleasing set of interim results. The figures highlighted good growth, boosted by new products and services. Revenue was up 7%, what they call “benchmark” EBIT rose 10% and profit margins were up 60 bps.[6] On the downside, higher interest rates worked against them in several ways during the period. In a conference call for analysts, the Chief Executive Brian Cassin noted that end markets are improving, to the extent the company upgraded its full year earnings expectations.
Written by David Gorman
Information is accurate as at 26.11.2024. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.
[1] ‘Tis the Season for Temptation: Holiday Shoppers Anticipate Overspending
[2] Our history | Experian plc
[3] Experian at a glance | Experian plc
[4] Experian and Oliver Wyman find expanded data and advanced analytics can improve access to credit for nearly 50 million credit invisible and unscoreable Americans