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Here's Why You Should Hold S&P Global Stock in Your Portfolio
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S&P Global Inc. (SPGI - Free Report) stock has had an impressive run in the past six months. Shares of the company have gained 19.2% compared with 17.6% and 12.8% growth of the industry and the Zacks S&P 500 composite, respectively.
Six Months Price Performance
Image Source: Zacks Investment Research
The company’s revenues are anticipated to increase 12.3% and 5.9% year over year in 2024 and 2025, respectively. Earnings are estimated to rise 20.6% in 2024 and 8.6% in 2025. The company has an estimated long-term (three to five years) earnings per share growth rate of 12.8%.
Factors That Auger Well for SPGI’s Success
S&P Global is leveraging traditional and generative AI (GenAI) to enhance its products and services, and improve its internal processes. New advanced analytics solutions and GenAI functionality via Cap IQ Pro were launched in the market intelligence domain. This allows users to build predictive models, automate workflow, and improve identity patterns and data swiftly.
Within the Commodity Insights domain, the company enables cloud delivery of AI-ready data on clean-energy technology. It introduced ChatAI, an AI-powered chatbot, to better the user experience and respond to customer questions in real time. SPGI is leveraging GenAI and animation automation to embed the CARFAX, CAR FOX directly in customer vehicle history reports.
Acquisitions are conducted by SPGI to innovate, expand content and introduce product offerings. In 2023, the company acquired Market Scan Information Systems, Inc., which improved mobility services. In the same year, the company bought out ChartIQ, strengthening its S&P Global Market Intelligence business.
The Shades of Green business buyout took place in 2022, which improved second-party opinions. The merger with IHS Markit completed in 2022 enhanced SPGI’s data and analytics offerings. The acquisition of The Climate Service in 2022 boosted S&P Global's ESG capabilities, and climate-related data and analytics.
SPGI focuses on optimizing its product portfolio to create the most customer and shareholder value. Hence, the company not only acquires different companies but also conducts divestiture when necessary. In the third quarter of 2024, it closed the divestiture of Fincentric and announced the divestiture of PrimeOne. These moves allow S&P Global to focus on the best opportunities to drive long-term profitable growth.
S&P Global’s strategy to reward its shareholders through share repurchases and dividend payments is commendable. In 2023, SPGI paid out $1.1 billion as dividends and $3.3 billion as repurchases. In 2022, S&P Global paid out $1 billion as dividends and $12 billion as repurchases. In 2021, S&P Global returned $743 million to shareholders through dividend payments. These initiatives instill investor confidence and boost the bottom line.
Risks Faced by S&P Global
SPGI is witnessing increased expenses due to investments in ongoing productivity programs, higher compensation costs due to growth initiatives, buyouts and higher incentive costs. In 2023, total expenses increased 3.4% year over year, which are expected to keep the bottom line under pressure.
SPGI is vulnerable to proceedings, investigations and inquiries regarding the ratings provided, leading to legal charges, damages or fines. The company faced a lawsuit from the U.S. Department of Justice against its subsidiary, Standard & Poor's Financial Services or S&P Ratings.
Image: Bigstock
Here's Why You Should Hold S&P Global Stock in Your Portfolio
S&P Global Inc. (SPGI - Free Report) stock has had an impressive run in the past six months. Shares of the company have gained 19.2% compared with 17.6% and 12.8% growth of the industry and the Zacks S&P 500 composite, respectively.
Six Months Price Performance
The company’s revenues are anticipated to increase 12.3% and 5.9% year over year in 2024 and 2025, respectively. Earnings are estimated to rise 20.6% in 2024 and 8.6% in 2025. The company has an estimated long-term (three to five years) earnings per share growth rate of 12.8%.
Factors That Auger Well for SPGI’s Success
S&P Global is leveraging traditional and generative AI (GenAI) to enhance its products and services, and improve its internal processes. New advanced analytics solutions and GenAI functionality via Cap IQ Pro were launched in the market intelligence domain. This allows users to build predictive models, automate workflow, and improve identity patterns and data swiftly.
Within the Commodity Insights domain, the company enables cloud delivery of AI-ready data on clean-energy technology. It introduced ChatAI, an AI-powered chatbot, to better the user experience and respond to customer questions in real time. SPGI is leveraging GenAI and animation automation to embed the CARFAX, CAR FOX directly in customer vehicle history reports.
Acquisitions are conducted by SPGI to innovate, expand content and introduce product offerings. In 2023, the company acquired Market Scan Information Systems, Inc., which improved mobility services. In the same year, the company bought out ChartIQ, strengthening its S&P Global Market Intelligence business.
The Shades of Green business buyout took place in 2022, which improved second-party opinions. The merger with IHS Markit completed in 2022 enhanced SPGI’s data and analytics offerings. The acquisition of The Climate Service in 2022 boosted S&P Global's ESG capabilities, and climate-related data and analytics.
SPGI focuses on optimizing its product portfolio to create the most customer and shareholder value. Hence, the company not only acquires different companies but also conducts divestiture when necessary. In the third quarter of 2024, it closed the divestiture of Fincentric and announced the divestiture of PrimeOne. These moves allow S&P Global to focus on the best opportunities to drive long-term profitable growth.
S&P Global’s strategy to reward its shareholders through share repurchases and dividend payments is commendable. In 2023, SPGI paid out $1.1 billion as dividends and $3.3 billion as repurchases. In 2022, S&P Global paid out $1 billion as dividends and $12 billion as repurchases. In 2021, S&P Global returned $743 million to shareholders through dividend payments. These initiatives instill investor confidence and boost the bottom line.
Risks Faced by S&P Global
SPGI is witnessing increased expenses due to investments in ongoing productivity programs, higher compensation costs due to growth initiatives, buyouts and higher incentive costs. In 2023, total expenses increased 3.4% year over year, which are expected to keep the bottom line under pressure.
SPGI is vulnerable to proceedings, investigations and inquiries regarding the ratings provided, leading to legal charges, damages or fines. The company faced a lawsuit from the U.S. Department of Justice against its subsidiary, Standard & Poor's Financial Services or S&P Ratings.
SPGI’s Zacks Rank & Stocks to Consider
SPGI carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are RB Global, Inc. (RBA - Free Report) & Deluxe (DLX - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RB Global has a long-term earnings growth expectation of 10.6%. RBA delivered a trailing four-quarter earnings surprise of 16.3%, on average.
Deluxe has a long-term earnings growth expectation of 12%. DLX delivered a trailing four-quarter earnings surprise of 18.4%, on average.