Does this news mean that the London Stock Exchange Group's share price is cheap?

I London Stock Exchange Group (LSE: LSEG) share price is up 39% over the past five years, ahead of FTSE 100 which owns its stocks.

Would it be a good way to buy the market, rather than looking for an index tracker?

On Thursday (October 24), the company reported an 8.7% increase in Q3 revenue year over year. In addition, being a London Stock Exchange, this company also gets a lot of revenue from its data services.

In fact, Data and Analytics accounted for 47% of revenue for the quarter at £992m, which even surpassed the Capital Markets firm's £468m revenue.

Partnership

CEO David Schwimmer spoke “to bring many new products in Q3.” He added “Our partnership with Microsoft continues to make solid progress and our product timetable is on track.“

During H1, the manager told us that the first product based on Microsoft should have been “widely available at the end of the year.” So that should be something to keep an eye on in 2025.

The thing I like most about this company is that it has a big safety net. And it has a good visibility of benefits.

There is competition in the stock market statistics business. But the London Stock Exchange has the advantage of being closer to the business end.

Regardless of where share prices may go in the coming decades, the demand for those services should definitely remain strong. The financial services industry still needs its data as much in a bear market as a bull.

Measurement

However, where I am cautious, is when it comes to detailing. Earnings per share (EPS) is a tricky number to grasp.

In the interim period, the company posted underlying EPS of 64.7p per share. If doubled, that would suggest a massive price-to-earnings (P/E) ratio of 82 for the full year.

But we also saw adjusted EPS of 174p in the segment. And using that as a basis puts the P/E at 31. I would need to dig deeper into the accounting adjustments here before considering a purchase.

And, if we look at the last five years, the share price of the London Stock Exchange has been incredibly volatile. I would expect a strong long-term company position to help keep it strong.

But no, sentiment seems to fluctuate like many other stocks.

A strong opinion

The financial data services market is expected to grow at around 10% per year between now and 2030. And that should hopefully mean good profit growth.

Clients include wealth managers, hedge funds, and all types of City institutions. They will certainly base their subscription decisions on their objective financial needs. And not in the emotions that can drive people in the short term.

So what is my take on the London Stock Exchange Group as an investment? Part of me sees it as one of the UK's safest and most reliable companies.

But another part of me is wary of high, uncertain valuations. And the estimated 1.2% dividend yield is not exciting.