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Reasons to Keep S&P Global (SPGI) Intact in Your Portfolio
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Acquisitions and their synergies have proven to be the strong point of S&P Global Inc. (SPGI - Free Report) . The company is also accelerating the pace of its innovation and expects profitable growth in the near future. The company is diversifying from its rating division and the same has been reflected in the recent fourth-quarter earnings.
The company reported impressive fourth-quarter 2022 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate.
Adjusted earnings per share (excluding $1.21 from non-recurring items) of $2.54 beat the Zacks Consensus Estimate by 2.8% but decreased 19.4% year over year. Revenues of $2.94 billion beat the Zacks Consensus Estimate by 2.5% and improved 40.6% year over year, backed by strength in every segment, except the Ratings division.
Despite pressure posed by inflation and a dramatic drop in debt issuance, SPGI has managed to grow banking on its cost synergies, timing and prioritizing of strategic investments. The company is taking steps to optimize its operations, portfolio and capital structure.
S&P Global is continuously making small but impactful acquisitions to enhance the offering in private markets, sustainability and energy transition products. The company plans to continue such strategic organic investments and opportunistic acquisitions to increase growth and innovation.
The company has recently entered into a long-term strategic partnership with Amazon’s (AMZN - Free Report) Amazon Web Services which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to better serve customers by developing new products.
The company has been continuing its shareholder-friendly attitude and rewarding its investors with a 16.9% hike in the recent dividend declaration, supported by a strong free cash flow in 2022 amounting to $1,012 million. The shareholder-friendly policies not only increase investors’ confidence in the stock but also has a positive impact on the demand.
SPGI leverages the constant demand for its subscription products. The company is also seeing an increasing demand for energy transition and advisory solutions. Multi-asset class demand from the insurance industry and bank-structured products are a plus for the company.
Let’s look at some other factors that make SPGI a stock to be retained in portfolios.
Earnings Expectations
Earnings growth and stock price gains often indicate a company’s prospects. For first-quarter 2023, SPGI’s earnings are expected to register a slight growth from the year-ago reported figure. For 2023 and 2024, the company’s earnings are expected to grow 11.3% and 15.1%, respectively, on a year-over-year basis.
The Zacks Consensus Estimate for the company’s earnings is pegged at $2.9 for first-quarter 2023. The estimate has been revised slightly upward in the past 60 days.
Earnings Surprise History
SPGI has a decent earning surprise history having beaten the Zacks Consensus Estimate in two of the four trailing quarters and missed in the other two. The average surprise is 0.2%.
SPGI currently carries a Zacks Rank #3 (Hold).
Some Risks
S&P Global's current ratio (a measure of liquidity) at the end of fourth-quarter 2022 was pegged at 0.94, lower than the current ratio of 2.31 reported at the end of fourth-quarter 2021. It indicates that the company may have problems meeting its short-term debt obligations.
The company caters to a very competitive market and such tough competition restricts the company to use the pricing power to its advantage. The top line has been impacted by the unfavorable macroeconomic environment and suspension of commercial operations in Russia.
Stocks to Consider
Investors interested in the broader Zacks Business Service sector may consider the following stocks:
ICF International (ICFI - Free Report) is being aided by the strong government business, courtesy of improvement in the business development pipeline and win rate. In the fourth quarter of 2022, ICFI reported better-than-expected results. Quarterly earnings (excluding $1.09 from non-recurring items) came in at $1.56, beating the Zacks Consensus Estimate by 4.7% and increasing 31.1% from the year-ago reported figure. For first-quarter 2023, ICFI’s earnings are expected to register 6.1% growth on a year-over-year basis. For 2023, the company’s earnings are expected to grow 6.4% on a year-over-year basis.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.39, which has been revised upward by 4.5% in the past 60 days. The consensus estimate for the full year is $6.14 per share. This has been revised upward 4% in the past 60 days. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnicom Group's (OMC - Free Report) internal development initiatives and shareholder-friendly policies ensure long-term profitability. In the fourth quarter of 2022, OMC reported better-than-expected results. Earnings of $2.09 per share beat the Zacks Consensus Estimate by 7.7% and increased 7.2% year over year, driven by a strong margin performance. For first-quarter 2023, OMC’s earnings are expected to match the year-ago reported figure of $1.39. The company’s earnings are expected to grow 3.2% on a year-over-year basis in 2023.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.39, which has been revised downward by 2.1% in the past 60 days. The consensus estimate for the full year is $7.15 per share. This has been revised upward 4.1% in the past 60 days. The company currently sports a Zacks Rank of 1.
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Reasons to Keep S&P Global (SPGI) Intact in Your Portfolio
Acquisitions and their synergies have proven to be the strong point of S&P Global Inc. (SPGI - Free Report) . The company is also accelerating the pace of its innovation and expects profitable growth in the near future. The company is diversifying from its rating division and the same has been reflected in the recent fourth-quarter earnings.
The company reported impressive fourth-quarter 2022 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate.
Adjusted earnings per share (excluding $1.21 from non-recurring items) of $2.54 beat the Zacks Consensus Estimate by 2.8% but decreased 19.4% year over year. Revenues of $2.94 billion beat the Zacks Consensus Estimate by 2.5% and improved 40.6% year over year, backed by strength in every segment, except the Ratings division.
S&P Global Inc. Revenue (TTM)
S&P Global Inc. revenue-ttm | S&P Global Inc. Quote
Despite pressure posed by inflation and a dramatic drop in debt issuance, SPGI has managed to grow banking on its cost synergies, timing and prioritizing of strategic investments. The company is taking steps to optimize its operations, portfolio and capital structure.
S&P Global is continuously making small but impactful acquisitions to enhance the offering in private markets, sustainability and energy transition products. The company plans to continue such strategic organic investments and opportunistic acquisitions to increase growth and innovation.
The company has recently entered into a long-term strategic partnership with Amazon’s (AMZN - Free Report) Amazon Web Services which allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership between SPGI and AMZN is expected to bring strategic cooperation to better serve customers by developing new products.
The company has been continuing its shareholder-friendly attitude and rewarding its investors with a 16.9% hike in the recent dividend declaration, supported by a strong free cash flow in 2022 amounting to $1,012 million. The shareholder-friendly policies not only increase investors’ confidence in the stock but also has a positive impact on the demand.
SPGI leverages the constant demand for its subscription products. The company is also seeing an increasing demand for energy transition and advisory solutions. Multi-asset class demand from the insurance industry and bank-structured products are a plus for the company.
Let’s look at some other factors that make SPGI a stock to be retained in portfolios.
Earnings Expectations
Earnings growth and stock price gains often indicate a company’s prospects. For first-quarter 2023, SPGI’s earnings are expected to register a slight growth from the year-ago reported figure. For 2023 and 2024, the company’s earnings are expected to grow 11.3% and 15.1%, respectively, on a year-over-year basis.
The Zacks Consensus Estimate for the company’s earnings is pegged at $2.9 for first-quarter 2023. The estimate has been revised slightly upward in the past 60 days.
Earnings Surprise History
SPGI has a decent earning surprise history having beaten the Zacks Consensus Estimate in two of the four trailing quarters and missed in the other two. The average surprise is 0.2%.
SPGI currently carries a Zacks Rank #3 (Hold).
Some Risks
S&P Global's current ratio (a measure of liquidity) at the end of fourth-quarter 2022 was pegged at 0.94, lower than the current ratio of 2.31 reported at the end of fourth-quarter 2021. It indicates that the company may have problems meeting its short-term debt obligations.
The company caters to a very competitive market and such tough competition restricts the company to use the pricing power to its advantage. The top line has been impacted by the unfavorable macroeconomic environment and suspension of commercial operations in Russia.
Stocks to Consider
Investors interested in the broader Zacks Business Service sector may consider the following stocks:
ICF International (ICFI - Free Report) is being aided by the strong government business, courtesy of improvement in the business development pipeline and win rate. In the fourth quarter of 2022, ICFI reported better-than-expected results. Quarterly earnings (excluding $1.09 from non-recurring items) came in at $1.56, beating the Zacks Consensus Estimate by 4.7% and increasing 31.1% from the year-ago reported figure. For first-quarter 2023, ICFI’s earnings are expected to register 6.1% growth on a year-over-year basis. For 2023, the company’s earnings are expected to grow 6.4% on a year-over-year basis.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.39, which has been revised upward by 4.5% in the past 60 days. The consensus estimate for the full year is $6.14 per share. This has been revised upward 4% in the past 60 days. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnicom Group's (OMC - Free Report) internal development initiatives and shareholder-friendly policies ensure long-term profitability. In the fourth quarter of 2022, OMC reported better-than-expected results. Earnings of $2.09 per share beat the Zacks Consensus Estimate by 7.7% and increased 7.2% year over year, driven by a strong margin performance. For first-quarter 2023, OMC’s earnings are expected to match the year-ago reported figure of $1.39. The company’s earnings are expected to grow 3.2% on a year-over-year basis in 2023.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.39, which has been revised downward by 2.1% in the past 60 days. The consensus estimate for the full year is $7.15 per share. This has been revised upward 4.1% in the past 60 days. The company currently sports a Zacks Rank of 1.