We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
S&P Global (SPGI) Down 8.9% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for S&P Global (SPGI - Free Report) . Shares have lost about 8.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is S&P Global due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
S&P Global Lags Q1 Earnings & Revenue Estimates
S&P Global reported lower-than-expected first-quarter 2022 results.
Adjusted earnings per share (excluding $1.58 from non-recurring items) of $2.89 missed the consensus mark by 3.7% and decreased 14.8% year over year. Revenues of $2.39 billion missed the consensus estimate by 15.7% but improved 18.5% year over year, backed by strength across every segment, except the Ratings division.
Segmental Revenues
Ratings revenues decreased 15% year over year to $868 million. Transaction revenues fell 31% year over year to $404 million due to a decrease in debt issuance across all categories. Non-transaction revenues improved 7% year over year to $464 million owing to growth in annual fees and CRISIL revenues.
Market Intelligence revenues were up 39% year over year to $727 million, primarily driven by growth in Data & Advisory Solutions, Desktop, Credit, Risk Solutions and Enterprise Solutions.
Commodity Insights revenues increased 51% to $363 million in the first quarter of 2022, primarily driven by Advisory & Transactional Services, Price Assessments,Energy, Resources Data & Insights.
S&P Dow Jones Indices revenues grew 19% to $322 million, backed by strength across asset-linked fees and exchange-traded derivative activity.
Operating Results
Segment wise, Ratings’ adjusted operating profit decreased 25% to $513 million while adjusted operating profit margin decreased 820 bps to 59.1%.
Market Intelligence’s adjusted pro forma operating profit increased 5% to $295 million while adjusted pro forma operating profit margin decreased 60 bps to 29%.
Commodity Insights adjusted pro forma operating profit increased 8% to $200 million and adjusted pro forma operating profit margin decreased 210 bps to 43%.
S&P Dow Jones’ adjusted pro forma operating profit increased 16% to $235 million. Adjusted pro forma operating profit margin improved 130 bps to 69.3%.
Balance Sheet and Cash Flow
S&P Global exited first-quarter 2022 with cash, cash equivalents and restricted cash of $4.40 billion compared with $6.5 billion at the end of the prior quarter. Long-term debt was $11.33 billion compared with $4.1 billion reported at the end of fourth-quarter 2021.
SPGI generated $222 million of cash from operating activities in the reported quarter. Capital expenditures were $2 million. Free cash flow was $151 million.
During the first quarter, S&P Global returned $7.3 billion to its shareholders through a combination of $7 billion in the form of an accelerated share repurchase (ASR) agreement and $265 million of cash dividends paid out by SPGI and IHS Markit pre-merge.
2022 Outlook
Adjusted pro forma revenues are now expected to grow in low single digits from the prior guidance of mid-single-digit growth. Adjusted pro forma EPS guidance was updated to $13.00-$13.25 (prior view: $13.30-$13.50). Guidance for adjusted pro forma free cash flow (excluding certain items) was also revised to a new range of $4.8-$4.9 billion (prior view: $4.9-$5.0 billion).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -7.01% due to these changes.
VGM Scores
At this time, S&P Global has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, S&P Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
S&P Global (SPGI) Down 8.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for S&P Global (SPGI - Free Report) . Shares have lost about 8.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is S&P Global due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
S&P Global Lags Q1 Earnings & Revenue Estimates
S&P Global reported lower-than-expected first-quarter 2022 results.
Adjusted earnings per share (excluding $1.58 from non-recurring items) of $2.89 missed the consensus mark by 3.7% and decreased 14.8% year over year. Revenues of $2.39 billion missed the consensus estimate by 15.7% but improved 18.5% year over year, backed by strength across every segment, except the Ratings division.
Segmental Revenues
Ratings revenues decreased 15% year over year to $868 million. Transaction revenues fell 31% year over year to $404 million due to a decrease in debt issuance across all categories. Non-transaction revenues improved 7% year over year to $464 million owing to growth in annual fees and CRISIL revenues.
Market Intelligence revenues were up 39% year over year to $727 million, primarily driven by growth in Data & Advisory Solutions, Desktop, Credit, Risk Solutions and Enterprise Solutions.
Commodity Insights revenues increased 51% to $363 million in the first quarter of 2022, primarily driven by Advisory & Transactional Services, Price Assessments,Energy, Resources Data & Insights.
S&P Dow Jones Indices revenues grew 19% to $322 million, backed by strength across asset-linked fees and exchange-traded derivative activity.
Operating Results
Segment wise, Ratings’ adjusted operating profit decreased 25% to $513 million while adjusted operating profit margin decreased 820 bps to 59.1%.
Market Intelligence’s adjusted pro forma operating profit increased 5% to $295 million while adjusted pro forma operating profit margin decreased 60 bps to 29%.
Commodity Insights adjusted pro forma operating profit increased 8% to $200 million and adjusted pro forma operating profit margin decreased 210 bps to 43%.
S&P Dow Jones’ adjusted pro forma operating profit increased 16% to $235 million. Adjusted pro forma operating profit margin improved 130 bps to 69.3%.
Balance Sheet and Cash Flow
S&P Global exited first-quarter 2022 with cash, cash equivalents and restricted cash of $4.40 billion compared with $6.5 billion at the end of the prior quarter. Long-term debt was $11.33 billion compared with $4.1 billion reported at the end of fourth-quarter 2021.
SPGI generated $222 million of cash from operating activities in the reported quarter. Capital expenditures were $2 million. Free cash flow was $151 million.
During the first quarter, S&P Global returned $7.3 billion to its shareholders through a combination of $7 billion in the form of an accelerated share repurchase (ASR) agreement and $265 million of cash dividends paid out by SPGI and IHS Markit pre-merge.
2022 Outlook
Adjusted pro forma revenues are now expected to grow in low single digits from the prior guidance of mid-single-digit growth. Adjusted pro forma EPS guidance was updated to $13.00-$13.25 (prior view: $13.30-$13.50). Guidance for adjusted pro forma free cash flow (excluding certain items) was also revised to a new range of $4.8-$4.9 billion (prior view: $4.9-$5.0 billion).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -7.01% due to these changes.
VGM Scores
At this time, S&P Global has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, S&P Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.