Shares of S&P Global Inc. (SPGI - Free Report) have gained 26.4% year to date, outperforming 2.1% rise of the Zacks S&P 500 composite. In contrast, the industry has declined 4.6%.
Let’s delve into the factors that have contributed to the company’s outperformance.
Consecutive Earnings & Revenue Beat
S&P Global reported back-to-back earnings and revenue beat in the last five quarters. While the bottom line gained from revenue growth and benefits of productivity initiatives, the top line performed well on the back of strength across all segments, namely S&P Global Ratings, S&P Global Market Intelligence, S&P Global Platts and S&P Dow Jones Indices.
Raised 2020 EPS Guidance
S&P Global raised its full-year adjusted-EPS guidance to the range of $10.75-$10.95 from the prior guidance of $9.95-$10.15. The current Zacks Consensus Estimate of $10.91 lies within the updated guidance range.
Strategic Acquisitions Bode Well
Acquisitions have been a key growth strategy for S&P Global, helping it continuously innovate, increase differentiated content and develop new products.
In 2020 so far, the company has completed the acquisitions of ESG Ratings Business (from RobecoSAM) and Greenwich Associates LLC. While ESG Ratings Business will boost the company’s position as a premier resource for essential ESG data, ratings, benchmarks and insights, Greenwich will complement the company’s existing portfolio of products and expand its offerings to new segments across financial services including commercial banks, and asset and wealth managers.
In 2019, the company acquired 451 Research, Canadian Enerdata, Live Rice Index and Orion technology center. 451 Research is likely to have strengthened S&P Global Market Intelligence's emerging technology expertise and offerings. Canadian Enerdata enhanced S&P Global Platts division's energy-analytical capabilities and strengthened its foothold in the North American natural-gas market. Live Rice Index is a great addition to Platts’ global agriculture offering. Orion technology center provides the company’s employees with access to the latest technologies and global communications infrastructure.
The company is expected to continue adding advanced technology and data sets through acquisitions, which in turn should boost its top- and bottom-line growth.
Zacks Rank and Stocks to Consider
S&P Global currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are IQVIA Holdings (IQV - Free Report) , ICF International (ICFI - Free Report) and CoreLogic (CLGX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected-earnings per share (three to five years) growth rate for IQVIA Holdings, ICF International and CoreLogic is 9.8%, 10% and 12%, respectively.
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