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The London Stock Exchange Group (LSE:LSEG) share price has punished investors over the past 12 months. The stock, which had surged in the first half of the year on the back of optimism about the Microsoft tie-up, is now trading 1% lower than it was five years ago — during the pandemic.
That’s clearly not a good statistic for investors who’ve held the stock for a considerable period of time.
However, data appears to be on their side, and the side of potential investors. The stock now looks meaningfully cheaper than it has done in some time. Has the share price ever been more appealing? I’m not sure.
But my conviction tells me this stock could push a lot higher.
The really important bit
Every investment should be made based on valuation and operational data. Here, earnings multiples and margins are key.
In the first half of 2025, adjusted EBITDA reached 49.5%, up 100 basis points. This shows us the company’s operational leverage across its four segments: Data & Analytics, Risk Intelligence, FTSE Russell, and Markets.
This high-margin profile supports a premium valuation, with recurring subscription revenues providing predictability in a competitive sector.
Consensus forecasts show adjusted earnings per share (EPS) growing from 403p in 2025 to 496p in 2027. That represents a compound annual growth rate of roughly 10.4% over the period, underpinned by strong organic income growth (+7% in 2025) and effective cost control.
It’s worth noting that not many FTSE 100 companies offer this level of earnings growth or margins. What’s more, strong cash generation supports a healthy dividend, with 2025 expected to deliver 140.8p per share.
This implies a yield of about 1.6% at the current share price, rising with the payout in subsequent years. Not groundbreaking but worth noting.
At the current price, the stock trades on forward price-to-earnings of 22 times for 2025, 20 times for 2026, and 18 times for 2027. That might sound expensive, but the combination of margin strength, double-digit growth, and a growing dividend suggests otherwise.
What are the risks?
Like every investment, there are risks. Competition in financial data and analytics could pressure pricing, while slower-than-expected adoption of new products may limit growth. There are lots of good products out there.
What’s more, currency fluctuations and regulatory changes are an ever-present risk.
However, investors should weigh these factors alongside the company’s strong margins and earnings potential.
And personally, I believe the risks are worth taking. The London Stock Exchange Group’s actually a pretty unique opportunity on the FTSE 100. It offers tech-type margins with a good economic moat and a strong earnings forecast. And it’s much less cyclical than banks or oil stocks.
Plus, this tie-up with Microsoft sounds like it could be really valuable. I’m intrigued to see where the latest agentic announcement goes next.
I certainly believe this is a stock worth considering. And I’m not alone. The 17 analysts covering the stock have 16 Buy ratings and just one Hold. The average target share price is 39%, higher than the current share price.
