UK stock report - Reed Elsevier

UK

RELX decreases on average volume October 20, 2017 16:30 BST

NEWS BITES - EUROPE

RELX PLC (L:REL), the largest Media company by market cap in the United Kingdom, has decreased GBX6.0 (0.4%) from its last trading session of October 19 to close at GBX1,691.0. The volume was 0.9 times the average daily trading volume of 2.9 million shares.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators, Moving Annual Return, Beta & Alpha, Aggregate Volumes, Prices and Turnover Period

SECTION 3 RANKING

Global, Independent Ratings

SECTION 4 FINANCIALS

Financials Summary, Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 5 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 6 STOCK BUZZ

SECTION 1 RELX BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 0.7%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 3.5% is 19.9%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 6.5 which compares unfavourably with the Joseph Piotroski benchmark of 5.

1.2 Overvaluation [compared with sector average]:

+ Price/Sales of 3.4 [2.1].

+ Dividend yield of 0.7% [2.8%].

1.3 Technicals:

Downtrend: The stock dropped on high volatility today.

+ The 1.4% discount to 12-month high of GBX1,715.79 against the 33.8% premium to 12-month low of GBX1,264.01 suggests the climb might be peaking.

1.4 Overbought/Bearish/Resistance Signals:

+ The Stochastic indicator of 87.6 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

1.5 Low Performance Indicators:

DescriptionValueRank In Market
Total Debt to Equity2.1In Bottom 6%
Price Change %-0.4In Bottom Quartile

SECTION 2 RELX BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1.8. Compared with the rest of the market the stock is undervalued.

+ Economic Value Added defined by Net Operating Profit After Tax of $US1.4 billion less Cost of Capital of $US311.2 million was $US1.1 billion. The multiple EVA/Cost of Capital was exemplary at 3.6 times.

+ Interest cover defined by EBIT/I is 8.3 times. This indicates it is less leveraged.

+ Net profit margin has averaged 16.9% in the last 3 years. This is considered superior and suggests a high margin of safety.

2.2 Undervaluation [compared with sector average]:

+ Return on Assets 8.8% [2.1%].

+ Return on Capital Employed 20.9% [5.0%].

2.3 Technicals:

+ The present value of GBP1,000 (PV1000) invested one year ago in RELX is GBP1,176, comprising a capital gain of GBP167 and dividend reinvested of GBP8.

PV10001-week1-month1-year
REL.L1,0071,0411,176
FTSE 100 Index9991,0201,071

+ The present value of GBP1,000 (PV1000) invested twenty years ago in RELX is GBP4,080, including a capital gain of GBP2,552 and dividend reinvested of GBP528.

+ 20 years Multiplier in GBP = 4.08x

+ Compound Annual Growth Rate (CAGR) in GBP = 7.3%

Oct 20, 2017: GBP 1 equals USD 1.32

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP47.2 million (US$62.1 million)In Top 3%
Return on Capital Employed [ROCE] %20.9In Top Quartile
Volatility %1.1In Top Quartile

2.5 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has consistently exceeded 17%.

RELClose (GBX)Dividends (GBX)Capital Gain %% YieldAnnual Return %
Oct 201,69111.716.70.817.5
1 Yr ago1,448.6932.5529.42.932.3
2 Yrs ago1,119.6426.424.42.927.3
3 Yrs ago900.1524.9514.83.218.0
4 Yrs ago783.9726.2845.34.950.1

Close 5 years ago GBX539.68

2.6 Beta & Alpha:

+ Beta: the Beta of RELX stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is 9.0. The actual return of 16.45% exceeded the expected return of 7.4%, reflecting outperformance.

2.7 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ London: REL.L 2,788,547 [VI of 0.9] volume 61.31% of aggregate. Price: GBX1,691.0.

+ Amsterdam: REN.AE 1,760,000 [VI of 0.8] volume 38.69% of aggregate. Price: EUR18.63. Using the current exchange rate of EUR1 equals 89.8GBX, The shares are at a 1.1% discount to the close price on London.

+ Aggregate volume: there were 4.5 million shares of RELX worth GBP76.6 million traded today. The aggregate volume was 0.9 times average trading of 5.2 million shares.

The turnover rate in the 12 months to date was 63.2% (or a turnover period of 1 year 6 months). This average length of ownership of the stock at 79.0 times the average holding period of 7 days for stocks in the FTSE 100 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 3 RANKING

3.1 Global Rank [out of 47,824 stocks] and Rank in the Europe Region [out of 8,439 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)23.8B630167
Total Assets (US$)13.3B2,245464
Revenue (US$)6.9B1,764400
Net Profit (US$)1.2B878195
Return on Equity %50.7588128
Net Profit Margin %17.06,8401,229
Price/Earnings40.117,7513,326
Yield %0.718,1413,165
PV$1000 (1Year) US$*1,25913,7273,006
US$* Change (1Year) %25.413,4142,971

* 1 year ago GBP 1 = USD 1.23

Oct 20, 2017: GBP 1 equals USD 1.32

3.2 Independent Ratings

RELX PLC is the 316th largest by revenue in the FT Global 500.

It is the 989th largest by revenue in the Forbes Global 2000.

It is placed 617/1287 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 52.

SECTION 4 RELX FINANCIALS

4.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)6.969
Pretax (USD)1.5B1.3B767.7M
Net (USD)1.2B1B763M
EPS (USD)0.5580.4890.6696

Net profit was up 15.2% from US$1 billion in 2015 to US$1.2 billion in 2016. Earnings Per Share (EPS) was up 14.1% from 48.90c to 55.80c.

4.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Net profit up 15.2% from $US1.0b to $US1.2b

+ Total revenue up 14.9% from $US6.0b to $US6.9b.

+ Administration expenses to Sales down from 24.2% to 23.6%.

+ Total current assets to Total Assets up from 17.2% to 17.7%.

+ Current Debtors to Total Assets up from 14.3% to 14.7%.

+ Future income tax benefit to Total Assets up from 3.1% to 3.3%.

Unfavourable Changes:

+ EBIT Margin down from 24.9% to 24.3%.

+ EBIT to total assets down from 13.3% to 12.6%.

+ Profit before tax to Sales down from 22% to 21.4%.

+ Debt to Equity up 14.8% from 1.8 to 2.1.

+ Current ratio down 4.3% from 0.5 to 0.4.

+ Total Liabilities to EBITDA of 6.5 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 8.1% from the previous year's ratio of 6.0.

+ Total Liabilities to Operating Cash Flow of 6.5 compares unfavourably with the Joseph Piotroski benchmark of <4.

+ Net tangible assets per share deterioration 24% from $US-3 to $US-3.72.

Note:

+ Interest cover steady at 8.3.

+ Total revenue to total assets steady at 0.5.

+ Cost of Goods Sold to Sales up from 35.7% to 36.1%.

+ Sales and marketing expenses to Sales down from 16.2% to 16.1%.

+ Tax expenses to Sales down from 5% to 4.4%.

+ Total liabilities to Total assets steady at 0.8.

+ Total non-current assets to Total Assets down from 82.8% to 82.3%.

+ Intangibles to Total Assets steady at 75%.

4.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (GBX)
20 Oct 201711.7
20 Oct 201632.55
20 Oct 201526.4
20 Oct 201424.95
20 Oct 201326.28

SECTION 5 RELX PROFILE

5.1 Activities

RELX PLC provides information solutions for professional customers across industries. The Company publishes information for the scientific, medical, legal, and business sectors.

5.2 Industry & Sector

Classification LevelName of Sector
Business SectorCyclical Consumer Services
Industry GroupMedia & Publishing
Economic SectorConsumer Cyclicals

5.3 Top Management

The chairman is Anthony Habgood, the chief executive officer is Erik Engstrom and the chief financial officer is Nick Luff.

5.4 Issued Capital

Based on 1,066,947,534 issued shares the market capitalisation is GBP18 billion (US$23.8 billion).

SECTION 6 STOCK BUZZ

Corporate Wire

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October 17: RELX: Transaction in Own Shares

RELX PLC announces that today it purchased through J.P. Morgan Securities plc 65,065 RELX PLC ordinary shares of 14 51/116 pence each on the London Stock Exchange at a price of 1676.4945 pence per share. The purchased shares will be held as treasury shares. Following the above purchase, RELX PLC holds 80,605,235 ordinary shares in treasury, and has 1,065,406,350 ordinary shares in issue (excluding treasury shares).

October 13: RELX: Transaction in Own Shares

RELX PLC announces that today it purchased through J.P. Morgan Securities plc 64,784 RELX PLC ordinary shares of 14 51/116 pence each on the London Stock Exchange at a price of 1679.6387 pence per share. The purchased shares will be held as treasury shares. Following the above purchase, RELX PLC holds 80,540,170 ordinary shares in treasury, and has 1,065,471,415 ordinary shares in issue (excluding treasury shares).

October 12: RELX: Transaction in Own Shares

RELX PLC announces that today it purchased through J.P. Morgan Securities plc 51,700 RELX PLC ordinary shares of 14 51/116 pence each on the London Stock Exchange at a price of 1692.3480 pence per share. The purchased shares will be held as treasury shares. Following the above purchase, RELX PLC holds 80,475,386 ordinary shares in treasury, and has 1,065,536,199 ordinary shares in issue (excluding treasury shares).

October 11: RELX: Transaction in Own Shares

RELX PLC announces that today it purchased through J.P. Morgan Securities plc 51,500 RELX PLC ordinary shares of 14 51/116 pence each on the London Stock Exchange at a price of 1688.7635 pence per share. The purchased shares will be held as treasury shares. Following the above purchase, RELX PLC holds 80,423,686 ordinary shares in treasury, and has 1,065,580,765 ordinary shares in issue (excluding treasury shares).

October 10: RELX buys back 51,500 shares

RELX (REL.L) announced a buyback of 51,500 shares worth GBP870,359 (or $US1,150,093) on October 10, 2017. The buyback price was GBX1,690.02.

Contact: 44-20-79307077

Physical Address: Grand Buildings, 1-3 Strand, London, WC2N 5JR, United Kingdom

State/Province/Country: United Kingdom

Country of Incorporation: United Kingdom

Exchange: London Stock Exchange

ISIN: GB00B2B0DG97

L:REL; LON:REL; LN:REL; REL.L

PermID: 4295894769

Relx Plc

Source: www.BuySellSignals.com