Episode Details

RELX PLC (RELX) H1 2026 — RELX PLC (NYSE: RELX), the information-and-analytics owner of LexisNexis, Elsevier and its Risk data business, reported strong first-half 2026 results (six months to June 30, reported in GBP): revenue of £4,871m (+7% underlying), adjusted operating profit up 9% to £1,727m as the group margin expanded to 35.5%, adjusted EPS of 68.6p (+11% constant currency), a 7% dividend hike to 20.9p, and £1.75bn of a £2.25bn buyback completed in the half at 98% cash conversion. Crucially, the two divisions the market feared AI would gut both accelerated: Legal (LexisNexis) +10% underlying and STM (Elsevier) +6%, with Risk +8%. Yet the ADR has fallen ~38% over 12 months — from ~$53 to ~$34.41 — as the multiple de-rated from ~31x to ~18x forward earnings on AI-disruption fears sparked by new legal/research AI tools. Our owner-earnings DCF (in £, converted at GBP/USD ~1.34, 1 ADS = 1 ordinary share) lands fair value near £35/share, about $47 per ADR, roughly 35% above the price. Our call: BUY 4/5 — a premium compounder de-rated on a fear its own results refute, aligned with a Strong Buy Street. The honest swing factor is long-run AI durability. Not financial advice. RELX is one of the great quiet compounders — the FTSE-100 information-and-analytics machine behind LexisNexis (Legal), Elsevier (STM), its high-margin Risk data business and RX Exhibitions. For a decade it traded at a rich ~31x earnings and simply kept grinding higher. Then in early 2026 the narrative flipped: powerful new AI tools (including a legal assistant from Anthropic) sparked fears that generative AI would commoditize legal research and scientific search, and the shares de-rated ~38% — the NYSE ADR falling from ~$53 to ~$34.41, roughly 18x forward earnings versus a ~31x history. But H1 2026 refutes the fear: revenue grew 7% underlying to £4,871m, adjusted operating profit rose 9% to £1,727m (35.5% margin), adjusted EPS +11% at constant currency, and the very businesses AI was supposed to kill accelerated — Legal +10% and STM +6%, with Risk +8%. Cash conversion was 98%, management raised the dividend 7% and completed £1.75bn of buybacks, and reaffirmed full-year guidance. RELX reports in pounds; we value the ADR in dollars (1 ADS = 1 ordinary share, GBP/USD ~1.34). Our owner-earnings DCF lands fair value near £35/share — about $47 per ADR — roughly 35% above today. Our call: BUY, 4/5. A world-class compounder sold off on an AI fear its results contradict, with management buying back stock and a Strong Buy Street (~$46 avg target) beside us. We stop short of 5/5 only because long-run AI durability is a real, unresolved question — but the price already assumes bad things that aren't happening. Not financial advice. THE CALL: BUY (4/5, A PREMIUM COMPOUNDER, DE-RATED ~38% ON AN AI FEAR ITS OWN RESULTS REFUTE) — base-case value ~$47 vs ~$34.41 today. What to watch: evidence the AI thesis is wrong in RELX's favor — Legal and STM holding double-digit and mid-single-digit underlying growth, RELX's own AI products (Lexis+ AI, Elsevier research tools) driving new sales, margins still climbing, and buybacks continuing — which would re-rate the multiple back toward its ~31x history; the risk to respect is the opposite: underlying growth in Legal or STM rolling over as generative AI genuinely commoditizes legal research and scientific search, in which case ~18x is fair rather than cheap and the premium never returns Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.