March 12, 2008 - IHS, Inc. (IHS-NYSE) handles the hottest commodity around: information. A publisher of technical documents for clients in the energy, defense, aerospace, construction, electronics, and automotive industries, the company distributes its data in several electronic formats (Internet, intranet, extranet, CD-ROM). Products such as collections of technical specifications and standards, regulations, parts data, and design guides are sold through its IHS Engineering unit. IHS also has an Energy segment that develops and delivers oil and gas industry data on exploration, development, production, and transportation activities.

Demand from the energy sector has increased notably as the company's data makes the odds for success in oil exploration much higher for drillers. Because of improved sales, analysts figure operating income will grow in double digits this year. Helping to reach that goal will be economies of scale, better productivity and higher prices. Combined, they should increase operating margins by over 100 basis points.

Earnings should grow to $1.90 this year, up from $1.40 in 2007. That's an improvement of 36%. In 2006, earnings were 79 cents a share. Revenues should also ramp noticeably. Last year they finished at $688 million. Analysts are looking for $820 million this year and $910 million next year. Market cap for the stock is $4 billion on 62.5 million shares.

IHS recently bought the British company McCloskey Group Ltd. for 14.4 million pounds in cash. (There is no debt on the books.) The company provides coal producers, traders, shippers, and corporations information about international coal markets. This put IHS into a new market and extends its expertise beyond oil and gas. According to the International Energy Association, the biggest growth in demand among all fossil fuels by 2030 will be coal.

On March 3, the company announced it is acquiring two leading environmental information companies, Dolphin Software, Inc., and Environmental Software Providers (ESP), for a combined purchase price of $43.5 million. The acquisitions are aligned with the IHS strategy of being the source for insight and information in the areas of energy, product lifecycle, security and environment.

The company is buying back its own shares. In 2007, it repurchased almost 700,000 at an average price of $42.29 a share. However, due to new issuances of stock (there was a sale of 3,750,000 shares in March of last year), the overall number of shares increased last year. Look for more stock purchases as the company in late 2007 authorized another 1 million shares be bought.

More numbers: The Thyssen-Bornemisza family controls about 75% of IHS. Current assets are a little more than current liabilities with the company showing $159 million in cash as of November of 2007. Net profit margin was 10.6% in 2006, 15.1% last year and is expected to be 17.2% this year and 18% next year. There are no dividends. The P/E is a rather high 42. Return on equity was 12.5% last year with forecasts of 14.5% this year and 14.5% next year.

No question this company has delivered for its customers and shareholders. Both are benefitting from good news. Investors love this stock. Just look at the P/E ratio. So if this one is of interest, you might want to spend more time investigating as well as waiting for a better entry point, if it ever comes. As long as the company keeps delivering stellar earnings, the stock will continue to have a premium price.

- Company Web site: www.ihs.com

- Ted Allrich