Investing.com -- S&P Global Ratings has upgraded RELX PLC to ’A-’ from ’BBB+’ due to the company’s consistent earnings growth and prudent financial policy. The rating agency made the announcement on March 21, 2025, and also affirmed the ’A-2’ short-term rating. The outlook for the company is stable.

S&P views RELX’s earnings stability, profitability levels, and free cash flow generation favorably when compared to its peers in the media, business services, and technology industries. The company’s credit metrics are expected to remain resilient to potential macroeconomic downturns and temporary weakening in business confidence.

RELX is forecasted to sustain robust organic revenue growth of 5%-6% annually in 2025-2027. This growth is likely to be supported by its strong and growing product offering in professional information-based analytics and data-driven decision tools, the recurring nature of its revenue, and broader digitization and automation trends.

The company’s stable and predictable financial policy is also acknowledged by S&P. The rating agency expects RELX to continue allocating its strong free cash flow among mergers and acquisitions (M&A), shareholder returns, and deleveraging, maintaining S&P Global Ratings-adjusted debt to EBITDA below 3x.

Over the past four years, RELX has consistently delivered 6%-9% revenue growth annually. This trend is expected to continue with 5% or greater organic revenue growth in the coming two to three years. This is attributed to its leading market positions in all its main business divisions, the importance and deep integration of its products in the clients’ workflows, and successful transition over the years to digital, data-driven tools and solutions.

RELX’s broad technological capabilities and vast historical datasets in risk and analytics, scientific, and legal, as well as its financial resources and flexibility, position it strongly to develop new products and tools, including AI-driven ones, and successfully roll them out to clients.

The company’s revenue and profit growth in the near term in its scientific, technical, and medical (STM) and legal divisions are expected to be above historical averages, thanks to a pivot to database-driven analytics tools and AI. RELX is viewed as the strongest business among rated data and analytics providers, with larger size and scale of operations and broader business and geographic diversity compared to its close industry peers Wolters Kluwer (AS: WLSNc ) and Thomson Reuters Corp (TSX: TRI ). and global credit reporting agency Experian (OTC: EXPGF ) Finance PLC.

The company’s prudent financial policy limits the risk of adjusted leverage increasing beyond the 3x threshold for the rating. Over the past 20 years, the company has only exceeded this threshold in times of exceptional stress, such as the global financial crisis in 2008-2009 and the 2020 COVID-19 pandemic. Even in these periods of stress, its free cash flow generation and free operating cash flow (FOCF) to debt metrics remained robust.

S&P anticipates RELX will generate solid FOCF of £2.3-2.5 billion annually in 2025-2027 and will allocate it between M&A and shareholder returns, keeping its adjusted leverage at about 2.3x. This incorporates an assumption of spending on acquisitions broadly in line with historical average and of share buybacks to continue beyond 2025.

The stable outlook reflects S&P’s view that RELX will maintain sustainable organic revenue growth and prudently allocate internally generated cash flow among acquisitions, dividends, and share buybacks, such that adjusted leverage will not exceed 3x and FOCF to debt will remain above 25%.

S&P could lower the rating over the next 24 months if RELX’s operating performance fell materially below expectations, for example, if the company posted negative organic revenue growth, or if sizable debt-funded acquisitions or shareholder returns led to adjusted debt to EBITDA increasing above 3x and FOCF to debt weakened to less than 20% without prospects for a swift deleveraging.

An upgrade is seen as unlikely in the near term. However, S&P could consider raising the rating if RELX performed in line with or better than the base case and committed to a more conservative financial policy that supported adjusted debt to EBITDA decreasing below 2x on a sustainable basis.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.