Is It Time To Reassess RELX (LSE:REL) After Its Recent Share Price Slide?
For profitable companies like RELX, the P/E ratio is a useful shortcut because it links what you pay for each share with the earnings that support that price. It helps you see how much the market is willing to pay today for each £1 of current earnings. Our Discounted Cash Flow (DCF) analysis suggests RELX is undervalued by 38.5%. Track this in your watchlist or portfolio , or discover 8 more high quality undervalued stocks . When all those future cash flows are discounted back and combined, the DCF model suggests an intrinsic value of about £40.00 per share. Compared with the current share price around £24.60, this implies an intrinsic discount of 38.5%, which points to the stock trading below this model’s estimate of fair value. For RELX, the latest twelve month free cash flow is about £2.33b. Analysts provide explicit forecasts for several years, and Simply Wall St then extends those estimates out to a 10 year path using a 2 Stage Free Cash Flow to Equity model. By 2028, projected free cash flow is £3.16b, with further projections beyond that based on the earlier analyst inputs. A Discounted Cash Flow, or DCF, model takes the cash that a company is expected to generate in the future and discounts those amounts back into today’s money to estimate what the business could be worth now. Right now, RELX holds a valuation score of 3 out of 6, which means half of the checks used suggest it may be undervalued and half do not. The next sections will break down the different valuation methods, with an even more complete way to think about value saved for the end of the article. Recent coverage has focused on RELX as a global information and analytics provider, with attention on how its data and analytics products are used across legal, scientific, technical and risk management markets. Commentary has also highlighted how investor expectations around these products can influence sentiment on the stock price, especially when markets reassess growth and risk. The stock has had a mixed run, with a 7 day return of an 8.8% decline, a 30 day return of a 3.2% decline, a year to date return of a 17.5% decline, but a 46.5% gain over 5 years. If you are wondering whether RELX at around £24.60 is offering good value or not, the starting point is understanding how that price lines up with the fundamentals. What counts as a “normal” P/E depends a lot on growth expectations and risk. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually lines up with a lower P/E. RELX currently trades on a P/E of 21.15x, compared with about 17.90x for the wider Professional Services industry and 19.00x for its peer group. Simply Wall St also provides a proprietary “Fair Ratio” of 32.45x, which is the P/E that might be expected given factors such as RELX’s earnings profile, its industry, profit margins, market cap and identified risks. This Fair Ratio aims to be more tailored than a simple comparison with peers or the industry because it adjusts for those company specific drivers rather than treating all companies as similar. When set against the actual P/E of 21.15x, the higher Fair Ratio of 32.45x suggests RELX shares are trading below that customised benchmark. Result: UNDERVALUED P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 5 top founder-led companies. Upgrade Your Decision Making: Choose your RELX Narrative Earlier it was mentioned that there is an even better way to understand valuation. Narratives take the story you believe about RELX, link it to specific forecasts for revenue, earnings and margins, turn that into a Fair Value, then compare it with the current price. All of this happens inside an accessible tool on Simply Wall St’s Community page that updates as new data like earnings or news arrives. This is why one investor on the platform currently sees RELX as worth around £22.13 per share, while another, using a more optimistic story and set of assumptions, arrives at a Fair Value closer to £52.33. For RELX, we will make it really easy for you with previews of two leading RELX Narratives: Together these give you a clear view of how different investors are connecting the same set of facts to very different conclusions on value, growth and risk. 🐂 RELX Bull Case Fair value from this narrative: £36.18 per share. Implied discount to this fair value: about 32.0% relative to the £24.60 last close. Revenue growth assumption: 6.41% a year. Analysts in this camp focus on AI powered analytics and digital subscriptions as key drivers supporting revenue, margins and earnings over time. The narrative leans on strong cash generation, a solid balance sheet and ongoing buybacks and acquisitions as support for long term earnings per share growth. Risks highlighted include open access pressure in academic publishing, competition from new AI tools and potential pushback on subscription pricing and contract renewals. 🐻 RELX Bear Case Fair value from this narrative: £22.13 per share. Implied premium to this fair value: about 11.2% relative to the £24.60 last close. Revenue growth assumption: 6.25% a year. This narrative sees RELX as a powerful data provider but questions whether the current share price already bakes in a lot of optimism about its data advantages. It argues that while proprietary datasets and legal protections matter, rapid advances in AI tools could still pressure pricing and customer loyalty over time. The key watchpoint for investors here is whether new AI offerings can deliver outcomes that are good enough for clients to reconsider paying a premium for RELX data access and tools. If you want to go beyond these snapshots and see the full range of community views, including how other investors are weighing the same risks and rewards, head over to the RELX Community Narratives page and read the stories that sit behind the numbers. To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for RELX on Simply Wall St. Add the company to your watchlist or portfolio so you’ll be alerted when the story evolves. Do you think there’s more to the story for RELX? Head over to our Community to see what others are saying! This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include REL.L. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com