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S&P Global (SPGI) Beats on Q2 Earnings & Revenues, Ups View

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S&P Global Inc. (SPGI - Free Report) reported better-than-expected second-quarter 2021 results.

Adjusted earnings per share of $3.62 beat the consensus mark by 10.4% and improved 6.5% year over year on the back of revenue growth, partially offset by increased compensation-related expenses.

Revenues of $2.11 billion beat the consensus estimate by 5.5% and improved 8.4% year over year, backed by strength across every segment.

Considering the pending merger with IHS Markit, both the companies continue to progress with integration-related planning, and are working with global regulators. The deal is expected to be completed in the fourth quarter of 2021.

So far this year, shares of S&P Global have gained 25.2% compared with 12.4% surge of the industry it belongs to and 18.4% growth of the Zacks S&P 500 composite.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s check out the numbers in detail.

Segmental Revenues                     

Ratings revenues increased 7% year over year to $1.07 billion. Transaction revenues fell 1% to $615 million, owing to a considerable decline in investment-grade bond issuance, offset by rise in bank loan rating activity, structured finance and high-yield bond issuance. Non-transaction revenues improved 19% to $458 million, backed by new-entity ratings, fees associated with surveillance and Rating Evaluation Service activity.

Market Intelligence revenues were up 8% year over year to $555 million, primarily driven by growth in Data Management Solutions, Credit Risk Solutions and Desktop.

Platts revenues rose 9% year over year to $236 million, backed by growth in core subscription business.

S&P Dow Jones Indices revenues grew 16% to $278 million, backed by strength across asset-linked fees and data & custom subscriptions.

Operating Results

Adjusted operating profit grew 8% year over year to $1.23 billion. Adjusted operating profit margin decreased 40 basis points (bps) to 58.3% owing to rise in compensation-related expenses.

Segment wise, Ratings’ adjusted operating profit improved 5% to $731 million while adjusted operating profit margin decreased 100 bps to 68.1%.

Market Intelligence’s adjusted operating profit increased 11% to $196 million and adjusted operating profit margin improved 100 bps to 35.4%.

Platts’ adjusted operating profit increased 8% to $136 million and adjusted operating profit margin decreased 40 bps to 57.9%.

S&P Dow Jones’ adjusted operating profit increased 15% to $198 million. Adjusted operating profit margin decreased 80 bps to 71.1%.

S&P Global Inc. Price, Consensus and EPS Surprise

S&P Global Inc. Price, Consensus and EPS Surprise

S&P Global Inc. price-consensus-eps-surprise-chart | S&P Global Inc. Quote

Balance Sheet and Cash Flow

S&P Global exited second-quarter 2021 with cash, cash equivalents and restricted cash of $5.22 billion compared with $4.52 billion at the end of the prior quarter. Long-term debt was $4.11 billion, flat sequentially.

The company generated $923 million of cash from operating activities in the reported quarter. Capital expenditures were $7 million. Free cash flow was $867 million.

During the reported quarter, the company returned $185 million to shareholders in the form of dividend payment.  However, it did not repurchase any share during the quarter due to the pending merger with IHS Markit.

2021 Guidance

S&P Global raised its full-year 2021 guidance. The company now expects adjusted EPS in the range of $12.95-$13.15 compared with the prior guidance of $12.55-$12.75. The current Zacks Consensus Estimate of $12.80 lies below the updated guidance.

Free cash flow is anticipated between $3.5 billion and $3.6 billion compared with the prior guidance of $3.4-$3.5 billion. Revenues are anticipated to grow in high-single digits compared with the prior expectation of mid-single digits. 

Currently, S&P Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax’s (EFX - Free Report) second-quarter 2021 adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and improved on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and improved 26% year over year on a reported basis and 23% on a local-currency basis.

Robert Half’s (RHI - Free Report) second-quarter 2021 earnings of $1.33 per share beat the consensus mark by 26.7% and were up more than 100% year over year. Revenues of $1.6 billion surpassed the consensus mark by 6.5% and increased 42.3% year over year on a reported basis and 40% on an adjusted basis.

ManpowerGroup’s (MAN - Free Report) second-quarter 2021 adjusted earnings of $2.02 per share beat the consensus mark by 68.2% and improved more than 100%. Revenues of $5.28 billion beat the consensus mark by 2% and inched up 41% year over year on a reported basis and 31.3% on a constant-currency (cc) basis.