Wolters Kluwer N.V. (the “Company”) is a global company that specializes in the provision of information, software, and services to thousands of professionals active in the financial services, healthcare, business, legal, and risk and compliance industries. 2015 revenues totalled EUR4.2B (2014: EUR 3.7B).

The Company’s activities are organized along four business divisions:

1. Health
2. Tax & Accounting
3. Governance, Risk & Compliance
4. Legal & Regulatory

As at the end of fiscal 2015, the Company employed approximately 18,055 full-time employees.

As per usual, lets take a closer look at several KPIs for the Company:

My analysis indicates that Wolters Kluwer N.V. has quite a few positives as a potential long-term investment:

1. Revenue diversity by product line;
2. High ‘quality’ of revenues;
3. Revenue diversity by geography;
4. Growing proportion of recurring / “annuity like” revenue;
5. Slow but steady organic growth;
6. Asset-light business model;
7. Strong cash generation;
8. Decent leverage metrics and strong coverage ratios;
9. Strong ROE, ROA and profit margins, and
10. Historically a consistent dividend player.

I believe the ten positives mentioned above outweigh the two “not-so-positive” items highlighted below:

1. No information on renewal rates or volume of service data (i.e. were price increases of volume increases driving organic growth), and

2. Services revenues appear to be under pressure over the past five years and this could             become an area of concern in the future if not remedied.

<This report was originally completed on December 6, 2016>

The Company is currently trading at a P/E ratio of  21 times, a P/B ratio of 3.85 times, and a P/S ratio of 2.34 times. For comparative purposes, the Company appears undervalued when compared to Thomson Reuters with its P/E ratio of 28.5 times and its P/S ratio of 2.6 times. Wolters Kluwer N.V. appears overvalued on P/B terms (2.63 times versus 3.85 times).

Wolters Kluwer N.V. shares have climbed 5.6% year-to-date (time of report writing).  I believe there is also the potential for the Company to be acquired by a larger player or even private equity given its attractive fundamentals and apparent lack of a controlling or significant shareholder.

What do you think of Wolters Kluwer N.V.?