Down 24%, is the RELX share price ready to turn the corner?

After a 24% fall in its share price over the past year, might RELX (LSE: REL) now be an attractive buy for my portfolio?

That is the question on my mind right now. While concerns about AI eating into its business have hammered its share price, it has gained 14% over the past couple of months.

So I have been wondering: could it be turning the corner?

This is a solid business and I don’t fear the AI impact

I have long thought RELX is a strong business.

It operates in multiple areas where customer demand is strong and alternatives are limited, such as providing vast reams of legal information to law firms. Its business model helps it make decent profits: last year, its operating margin was 32%.

But such information-rich businesses could be susceptible to AI-powered rivals.

We have seen similar fears push down the share prices of other businesses whose information trove is a competitive advantage, such as Autotrader Group (down 34% in a year) and Rightmove (now 32% cheaper than 12 months ago).

I think such fears are overdone, and it may be that the recent uptick in the RELX share price suggests that the market is also warming to that view.

Building the sort of proprietary databases RELX owns is hugely expensive. If anything, AI could actually turn out to help the company as it may lower some of its operating costs while rivals continue to lack its proprietary dataset, AI or no AI.

The price is cheaper, but not cheap

Having fallen by almost a quarter, is the RELX share price now a bargain?

I do not think so. Currently, the shares sell for 21 times earnings.

Over time, I expect revenues and earnings to grow as RELX has proven adept at building its business and adapting to a changing environment (another reason I do not fear AI’s impact on it). But I expect that growth to be modest not exponential.

This year’s interim figures illustrate this: revenue was up 3% year on year while operating profit was up 6%.

Earnings per share grew by almost a quarter, but I see that as exceptional rather than a norm.

I’m tempted, but not tempted enough

I have owned RELX shares in the past precisely because I think this is a high-quality business and, if the price is right, will be happy to buy them again.

Given that quality, I accept that the RELX share price can merit a premium. That may help explain why it was as high as it was 12 months ago.

If investors start to feel more confident that AI is not an existential threat to RELX’s business, I think the recent uptick in the share price could potentially be the start of a fuller recovery.

But I could be wrong about the impact of AI, so do not discount it as a risk altogether.

Meanwhile, RELX faces other potential challenges, such as weakening exhibition revenues. They declined 1% in the first half.

So on this occasion I will not be buying into RELX. Instead, I am looking for other great businesses with a more attractive share price right now.

Should you invest £5,000 in RELX right now?

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Christopher Ruane does not hold any positions in the companies mentioned.