It’s been a good week for RELX PLC (LON:REL) shareholders, because the company has just released its latest annual results, and the shares gained 2.6% to UK£35.00. It looks like the results were a bit of a negative overall. While revenues of UK£9.2b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.0% to hit UK£0.94 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
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Following the latest results, RELX’s 13 analysts are now forecasting revenues of UK£9.75b in 2024. This would be a satisfactory 6.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 14% to UK£1.08. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£9.71b and earnings per share (EPS) of UK£1.08 in 2024. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£36.51. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. The most optimistic RELX analyst has a price target of UK£41.00 per share, while the most pessimistic values it at UK£32.50. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s clear from the latest estimates that RELX’s rate of growth is expected to accelerate meaningfully, with the forecast 6.4% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.8% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.7% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that RELX is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on RELX. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple RELX analysts – going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example – RELX has 2 warning signs we think you should be aware of.
Valuation is complex, but we’re helping make it simple.
Find out whether RELX is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
