Yahoo Finance 3 Stocks to Buy From the Booming Business Information Industry
The increased adoption and success of the work-from-home trend are enabling the Zacks Business – Information Services industry to address the rising demand for services that ensure risk mitigation, cost reduction and productivity improvement.The heightening technology adoption is benefiting companies like Experian plc EXPGY, FactSet Research Systems Inc. FDS and Intertek Group plc IKTSY, supporting them to offer digitally-transformed, personalized and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risks, research, information and analytics solutions. These companies operate in a dynamic business environment characterized by evolving customer behavior, preferences and demographics. The key focus within the industry is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making, to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider S&P Global and the provider of data analytics solutions, Verisk Analytics.
4 Trends Shaping the Future of the Information Industry
Healthy Demand Environment: The industry is mature and has witnessed a progressively growing business environment in the past few years. Revenues, income and free cash flows are likely to see healthy growth during the post-pandemic economic improvement.
Demand for Customer-Centric Solutions: The pandemic has stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. These, in turn, have opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Increased Adoption of Technologies: Digital transformation, automation in assembling and the use of big data in enhancing business information will fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services.
Zacks Industry Rank Indicates Bright Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #46, which places it in the top 18% of more than 250 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business – Information Services industry has outperformed the Zacks Business Services sector but underperformed the S&P 500 Composite.
The industry has risen 24.4% compared with the S&P 500 Composite and the broader sector’s growth of 29.4% and 29.1%, respectively, in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing business information services stocks, the industry is currently trading at 27.87X compared with the S&P 500’s 20.94X and the sector’s 26.13X.
Over the past five years, the industry has traded as high as 27.53X and as low as 21.13X, with a median of 25.69X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Business Information Service Stocks in Focus
We have presented three stocks that are well-positioned to grow in the near term.
Experian: This provider of data services, analytical and decision tools is currently benefiting from acquisitions and new business wins. The company’s top line is benefiting from solid contributions from major product lines and new products.
Experian currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fiscal 2024 earnings has been revised 0.7% upward in the past 60 days to $1.45 per share. The stock has gained 30.7% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FactSet Research Systems: FactSet has been engaged for more than 40 years in delivering extensive data, sophisticated analytics and flexible technology to global financial professionals and is currently benefiting from a growing customer base and strong global presence. The company added 24 clients in the first quarter of fiscal 2024, taking the total to 7,945. The annual client retention rate was 95%. FactSet’s Annual Subscription Value plus professional services were up 7.1% year over year in the quarter.
The company currently carries a Zacks Rank #2. The Zacks Consensus Estimate for the fiscal 2024 earnings has remained unchanged at $15.76 per share in the past 60 days. The stock has gained 15.7% in the past year.
Intertek: Thisquality assurance solutions provider is currently benefiting from acquisitions, investments and disciplined cost management. The company’s Assurance, Testing, Inspection and Certification (ATIC) portfolio is benefiting from increasing demand for ATIC solutions.
Intertek currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings has been revised 2.4% upward in the past 60 days to $3.01 per share. The stock has gained 26.3% in the past year.
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FactSet Research Systems Inc. (FDS) : Free Stock Analysis Report
Experian PLC (EXPGY) : Free Stock Analysis Report
INTERTEK GP (IKTSY) : Free Stock Analysis Report
