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I’ve been watching shares in FTSE 100 events company Informa (LSE:INF) closely over the last few months. And it’s just released its results for the first half of 2025.
Underlying sales grew 7.8%, operating income increased by 9.2% and management increased its guidance for the full year. As a result, the stock is up 5% this morning (23 July).
Results
In the context of a company that had been aiming for 5% underlying revenue growth, 7.8% is an impressive first half. But across its various divisions, the picture is a bit more uneven.
Live events revenues — Informa’s largest business line — grew 8.5%. Meanwhile, its publishing unit achieved 11.9%, but sales in its digital division fell 4.3%.
In terms of operating income, the story is even more impressive. Informa had been targeting adjusted earnings per share growth in excess of 10% over the full year and the update revealed a 25% increase.
Overall, I think the report is extremely strong. And this is reflected in the stock market’s positive reaction.
Growth
Informa’s revenues have roughly tripled over the last 10 years, which is impressive. But it’s important to note that a lot of this has been the result of acquiring other companies.
As well as boosting sales, these have had the effect of strengthening the firm’s portfolio of events and adding some key names to the group. But there are inherent risks with this approach.
One example is Ascential, which Informa acquired for £1.2bn. Larger acquisitions generally bring greater risks, so this is something investors will need to keep an eye on both now and in future.
Importantly though, the firm’s underlying revenue metrics exclude the effect of acquisitions. So this shouldn’t detract from a generally strong set of sales results in the latest update.
Valuation
A price-to-earnings (P/E) ratio of 37 makes Informa shares look relatively expensive. But I don’t think this is the right way to value the FTSE 100 stock.
The firm’s brand portfolio is its key asset. A consequence of building this through acquisitions is that its income statement has a lot of amortisation as the cost of these is expensed over time.
This means earnings per share are subject to a significant number of non-cash charges. Adjusting for this, the stock trades at a much more reasonable multiple of around 18.
On that basis, I don’t think the stock is particularly expensive at all. And the stock rising on the basis of today’s results doesn’t really change my view on that.
What I’m doing
Informa is a relatively recent addition to my Stocks and Shares ISA. But from an investment perspective, I can see a lot to like about the company and I don’t think it always gets the attention it deserves.
Its events are unique, important, and have some very attractive economic properties. Over the long term, these are the factors that I think are going to matter the most.
The fact the firm is also growing at a decent rate is a welcome bonus. So even with the share price moving higher, I’m looking to keep buying the stock.
This story originally appeared on Motley Fool
