2 FTSE 100 stocks that could collapse very soon

Global information services group Experian(LSE: EXPN) has seen its shares perform remarkably well this year despite announcing disappointing results for its most recent financial year. Revenues for the 12 months to 31 March came in $260m lower than in FY2015 at $4.55bn, with underlying earnings shrinking for the first time in eight years. But this didn't stop investors from piling-in and sending the shares soaring past previous all-time highs. The market is a strange beast indeed.

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No Brexit impact

The Dublin-based group best known for its credit checking services provided its most recent update in July when it revealed that first quarter revenues were 5% higher on a constant currency basis, but actual total revenue growth was up just 1%. The company said it didn't expect any significant adverse impact as a result of the UK's decision to leave the European Union, and indeed the shares have climbed even higher since the historic vote.

Market consensus estimates suggest another fall in revenues this year for Experian, with earnings set to remain broadly flat, before a return to modest single-digit growth for FY2018. At current levels, Experian trades on a forecast price-to-earnings ratio of 22 for the current financial year, falling to 20 next year, but still looking pricey given the modest earnings outlook. This year's strong rally means the shares have gained 46% in just 12 months, leaving them ripe for a significant market correction.

Tough trading conditions

Multinational diversified engineering business Smiths Group(LSE: SMIN) is another FTSE 100 giant that has outperformed the wider market this year despite mediocre results. Last month the group announced results for the year to the end of July with a 2% fall in underlying revenues to £2.95bn. The big letdown this year has been the John Crane oil services division, which experienced tough trading conditions amid volatility in global energy markets. This led to a reduction in demand for its services.

Despite having a market value of just under £6bn and being a constituent of the blue chip FTSE 100 index, the London-based multinational is perhaps one of the lesser-known global technology and engineering giants. In fact, Smiths is a world leader in the practical application of advanced technologies and employs 23,000 people in 50 countries. It applies leading-edge technology to design, manufacture and deliver innovative solutions across a wide range of applications and end markets, from healthcare, energy and petrochemicals through to threat and contraband detection, telecommunications and equipment manufacture.

But at the time of the results announcement last month, the group's CEO Andy Reynolds Smith, said "the business isn't focused enough on the future for me at the moment," and promised to increase research spending by £20m in the next year, targeting the medical and detection businesses that are expanding. "I'd like to turn our sights to the future rather than focusing on the immediate needs of the market," he told the Telegraph.

But such investment will take time to yield results and unfortunately, the challenges faced by the John Crane oil services division are expected to continue. With the group's underlying earnings forecast to remain flat for the current trading period, the shares look expensive at 17 times earnings for FY2017. After gaining over 40% in the past year, the share price is at an all-time high and could be heading for an overdue correction very soon.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.