S&P Global Inc. ( SPGI Quick Quote SPGI - Free Report) have gained 22.4% year to date, outperforming 3.9% rise of the industry it belongs to and 12.7% rise of the Zacks S&P 500 composite.
Let’s delve into 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 six 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.
Upbeat 2020 EPS Guidance
S&P Global raised its full-year adjusted EPS guidance to the range of $11.30-$11.45 from the prior guidance of $10.75-$10.95. The current Zacks Consensus Estimate of $11.45 is in line with the higher end of the raised guidance.
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 its 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 Heidrick & Struggles International ( HSII Quick Quote HSII - Free Report) , Automatic Data Processing ( ADP Quick Quote ADP - Free Report) and Insperity ( NSP Quick Quote NSP - 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 Heidrick & Struggles International, Automatic Data Processing and Insperity is 10%, 12% and 15%, respectively.
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