IHS Inc. Investor Day Reinforces Steady Progress

IHS held its annual investor day in New York City on Tuesday . In large part, the trends and data points management communicated during the event reiterated points from the last two quarterly conference calls and the messages from our visit to headquarters last week, and was consistent with the overarching theme from last year’s event.

The consistency of management’s recent commentary should help the Street gain confidence that the company’s growth strategy remains on track and IHS is one year closer to realizing the benefits from internal improvements made over the last few years.

The IHS investment thesis continues to be characterized by a back-half-weighted 2014, but we believe investor expectations reflect this. The setup, is better heading into the next three quarters than it has been in quite some time. If management is able to deliver on what it has communicated to the Street, we believe shares of IHS should outperform the market and the stock’s valuation could move higher as management gets rewarded for delivering on what it promised.

The stock’s current valuation compares with its historical forward enterprise-value-to-EBITDA trading range of roughly 14 to 16 times.

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