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Buyouts and Shareholder-Friendly Policies Aid S&P Global (SPGI)

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S&P Global (SPGI - Free Report) is well-poised to benefit from the rising demand for business information services. Their strategic acquisitions drive innovation, enhance content, and foster new product development. Efficient management execution has resulted in strong cash flow, empowering the company to invest in strategic growth endeavors.

S&P Global second-quarter earnings match the Zacks Consensus Estimate while revenues surpass the same. Adjusted earnings per share (excluding $1.52 from non-recurring items) of $3.12 were up 11% year over year. Revenues of $3.1 billion surpassed the consensus estimate by 1.1% and improved 3.6% year over year, backed by the synergies from Market Scan Information Systems and ChartIQ.

Factors Boding Well

S&P Global is in a strong position to benefit from the rising demand for business information services. The ever-expanding volume of data from both private and government entities has created a greater need for enhanced visibility into financial performance across enterprises. This increased demand for news, information, and analytics solutions is expected to be a key driver of market growth. Additionally, the industry is experiencing a boost in demand for risk mitigation services.

Acquisitions play a pivotal role in S&P Global's growth strategy, enabling the company to foster innovation, expand its range of distinctive content, and introduce new products. Notably, on Feb 17, 2023, S&P Global completed the acquisition of Market Scan Information Systems, Inc., a move aimed at enhancing the company's mobility offerings. Furthermore, on Jan 5, 2023, S&P Global announced its acquisition of ChartIQ, a strategic step to bolster S&P Global Market Intelligence.

A Risk

S&P Global's current ratio (a measure of liquidity) at the end of second-quarter 2023 was pegged at 0.78, lower than the current ratio of 0.91 reported at the end of first-quarter 2023. Decreasing current ratio indicates that the company may have problems meeting its short-term debt obligations.

Apart from S&P Global, other companies from the broader Business Services are Automatic Data (ADP - Free Report) , TransUnion (TRU - Free Report) and Gartner (IT - Free Report) , which have performed well in their earning releases and thus warrant a look.

Automatic Data  reported better-than-expected fourth-quarter fiscal 2023 results. Adjusted earnings per share (EPS) of $1.89 (excluding 1 cent from non-recurring items) beat the Zacks Consensus Estimate by 3.3% and grew 26% from the year-ago fiscal quarter’s figure.  Total revenues of $4.47 billion beat the consensus estimate by 1.8% and improved 8.5% from the year-ago fiscal quarter’s reading on a reported basis and 9% on an organic constant-currency basis.

TransUnion reported impressive second-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Quarterly adjusted earnings of 86 cents per share (adjusting 58 cents from non-recurring items) surpassed the consensus mark by 3.6% but decreased 12.2% year over year. Total revenues of $968 million beat the consensus mark by 1% and increased 2.1% year over year on a reported basis. Revenues were up 3% on a constant-currency basis, mainly driven by strength in international markets.

Gartner reported better-than-expected second-quarter 2023 results. Adjusted EPS (excluding 37 cents from non-recurring items) of $2.85 beat the Zacks Consensus Estimate by 14.9% and matched the year-ago reported figure. Revenues of $1.5 billion beat the consensus estimate by 1% and improved 9.2% year over year on a reported basis and 10% on a foreign currency-neutral basis. The total contract value was $4.6 billion, up 8.9% year over year on a foreign currency-neutral basis.

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