Broker snap: Experian's own credit rating checks out

19th May 2010 11:39

Preliminary results from credit checker Experian were ahead of expectations on the profits front but Charles Stanley says the key feature of the figures is the delivery of cash, with net debt tumbling from $2.1bn at the end of March 2009 to $1.6bn at the end of Mach 2010."The reduction in debt and the ongoing strong cash generation has encouraged Experian to improve its distribution to shareholders via dividends and introduce a $300m share buyback," Charles Stanley analyst Tony Shepard notes, adding that the good results and the increased distribution policy should be well received.Experian has disclosed that it intends to reduce earnings cover on its dividend pay out from 3.0 to 2.5 over the next year.For fiscal 2011 Charles Stanley is estimating earnings per share of around 67 cents, which would imply a dividend of about 27 cents. "On this basis, the share is on a prospective P/E [price/earnings ratio] of 13x and a dividend yield of 3.1%," Shepard notes.The broker has reiterated its "buy" recommendation on the stock.