INDEPENDENT ORGANISERS graph , Emerald ’ s share price has been little short of disastrous for investors over the past five years – falling from $ 22.42 in 2017 to $ 3,77 in December 2022 . The company was worth only $ 258 million at the end of 2022 . This might seem remarkable for a company which was making a profit ( EBITDA ) of $ 47 million in 2017 and has the highest margins in the industry . It does have long term debt of some $ 500 million . But despite being a publicly quoted company , unlike Hyve or Informa or Reed Elsevier , you couldn ’ t buy the company even if you wanted to . This is because Onex , a Canadian private equity house , owns the majority of the shares – and therefore the only route to it changing hands is to agree a deal with Onex . When Onex reduced their shareholding from 75 % to 65 % early in 2018 ( I was in Emerald ’ s NY office on that day ) the share price dropped dramatically . This was because the market saw little if any point in buying more shares when Onex had complete control and there was therefore a vanishing small prospect of any outsider making a bid . If you add the $ 258M which the company is nominally worth to the $ 500M debt – a total of some $ 758M – and then divide it by the 2017 profit of $ 47M , you get 16 . ( This assumes that Emerald will be able to get back to 2017 levels by 2023 ). This might be called the P / E ratio – which is basically what the company ’ s “ enterprise ” value is ( shares plus debt ) divided by its profit . The
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P / E ratio ( which has a quite a few complications in its calculations and can only be a rough guide ) is the number which is often used to assess how “ valuable ” a company really is and gives an idea what it might cost to buy the whole company . Basically in this case you would pay $ 16 for every $ 1 of profit , or , simplistically , if you bought the shares today and profits stayed the same you would get your money back in 16 years . Reed Elsevier is a good guide for us – and its PE at the date of writing was 30 . This is a high number – Microsoft was 26 and Apple 24 on the same day . It reflects the market ’ s view that RE is a high quality business with a reliable stream of earnings . RX is around 15 % of Reed Elsevier ’ s turnover and it is not separately analysed . Going back to Emerald , investors buy when they think the share price will go up and the company will be generating higher future profits ( or if they think a bid is on the way ). That is , to date , not the case with Emerald and we must presume that there is some doubt about the company ’ s emergence from the pandemic . Added to that , Emerald is regarded as being very dependent on the retail sector in its mix of shows and the growth of on-line retail has not helped confidence .
Going alphabetically , how is Informa placed ? As you can see from the graph , 5 years ago the Informa share price was at 747 pence and , at the time of writing , is at 620 pence . It peaked at 833 pence at the time of the UBM takeover . Clearly it has been recovering , if slowly , and there is no helpful guide to a P / E ratio ( though 14 has been quoted in some analyses ) because the effect of not being able to run shows for 18 months has not yet worked its way through the numbers and comparisons with prior years are thus largely meaningless .
Informa share price Dec ‘ 17 - Dec ‘ 22 ( Source : LSE )
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