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3 Business Information Stocks to Watch Amid Industry Woes
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The increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to address the pandemic-induced rising demand for services that ensure risk mitigation, cost reduction and productivity improvement. The heightening technology adoption is benefiting companies like S&P Global Inc. (SPGI - Free Report) , Experian plc (EXPGY - Free Report) and Intertek Group plc (IKTSY - Free Report) , enabling 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, preference and demographics. Amid the pandemic, the key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making. To position themselves suitably in the post-pandemic era, service providers are trying to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider, S&P Global and a 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.
Digital Transformation is the Key: Companies focused on digital transformation are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates time to market and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: 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 Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #224, which places it in the bottom 10% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms 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, the S&P 500 composite and the Zacks Business Services sector haveplunged.
The industry has declined 19.2% compared with the S&P 500 composite and the broader sector’s decline of 11.3% and 19.9%, 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 25.18X compared with the S&P 500’s 18.47X and the sector’s 23.26.
Over the past five years, the industry has traded as high as 32.34X, as low as 19.91X and at the median of 25.95X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Business Information Service Stocks in Focus
We are presenting 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 strong new business performance. The company’s top line is benefiting from the company’s investments in new products and consumer expansion.
Experian currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fiscal 2024 EPS has remained unchanged in the past 60 days to $1.36. The stock has gained 4.6% in the past six months.
S&P Global: This credit ratings, benchmarks, analytics, and workflow solutions provider is continuously making small but impactful acquisitions to enhance its offering in private markets, sustainability and energy transition products. The company plans to continue such strategic organic investments, and opportunistic acquisitions to increase growth and innovation.
The company recently entered into a long-term strategic partnership with Amazon Web Services, which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to serve customers better by developing new products.
S&P Global currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2023 EPS has remained unchanged in the past 60 days to $12.45. The stock has gained 6.6% in the past six months.
Intertek: Thisquality assurance solutions provider is currently benefiting from acquisitions, investments and disciplined cost management. The company’s Assurance, Testing, Inspection and Certification (AITC) portfolio is benefiting from the fast-growing AITCC quality assurance market.
Intertek currently carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2023 EPS has been revised 3% upward in the past 60 days to $2.63. The stock has gained 13.3% in the past six months.
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3 Business Information Stocks to Watch Amid Industry Woes
The increased adoption and success of the work-from-home trend is enabling the Zacks Business – Information Services industry to address the pandemic-induced rising demand for services that ensure risk mitigation, cost reduction and productivity improvement. The heightening technology adoption is benefiting companies like S&P Global Inc. (SPGI - Free Report) , Experian plc (EXPGY - Free Report) and Intertek Group plc (IKTSY - Free Report) , enabling 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, preference and demographics. Amid the pandemic, the key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making. To position themselves suitably in the post-pandemic era, service providers are trying to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider, S&P Global and a 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.
Digital Transformation is the Key: Companies focused on digital transformation are positioned to recover quickly post the global health crisis. This is because digital transformation substantially enhances operational efficiency, facilitates time to market and boosts a firm’s ability to quickly and efficiently meet customer expectations.
Increased Adoption of Technologies: 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 Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #224, which places it in the bottom 10% of more than 250 Zacks industries.
The group’s Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms 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, the S&P 500 composite and the Zacks Business Services sector haveplunged.
The industry has declined 19.2% compared with the S&P 500 composite and the broader sector’s decline of 11.3% and 19.9%, 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 25.18X compared with the S&P 500’s 18.47X and the sector’s 23.26.
Over the past five years, the industry has traded as high as 32.34X, as low as 19.91X and at the median of 25.95X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Business Information Service Stocks in Focus
We are presenting 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 strong new business performance. The company’s top line is benefiting from the company’s investments in new products and consumer expansion.
Experian currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fiscal 2024 EPS has remained unchanged in the past 60 days to $1.36. The stock has gained 4.6% in the past six months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
S&P Global: This credit ratings, benchmarks, analytics, and workflow solutions provider is continuously making small but impactful acquisitions to enhance its offering in private markets, sustainability and energy transition products. The company plans to continue such strategic organic investments, and opportunistic acquisitions to increase growth and innovation.
The company recently entered into a long-term strategic partnership with Amazon Web Services, which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to serve customers better by developing new products.
S&P Global currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2023 EPS has remained unchanged in the past 60 days to $12.45. The stock has gained 6.6% in the past six months.
Intertek: Thisquality assurance solutions provider is currently benefiting from acquisitions, investments and disciplined cost management. The company’s Assurance, Testing, Inspection and Certification (AITC) portfolio is benefiting from the fast-growing AITCC quality assurance market.
Intertek currently carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2023 EPS has been revised 3% upward in the past 60 days to $2.63. The stock has gained 13.3% in the past six months.