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Here's Why Investors Should Hold S&P Global (SPGI) Stock Now
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Shares of S&P Global Inc. (SPGI - Free Report) have gained a massive 33.5% in a year’s time, outperforming the 26.5% rally of the industry it belongs to.We believe that the company has the potential to carry on with this outperformance, moving ahead.
Our optimism is backed by the company’s potential gain from increasing demand for business information services, acquisitions and a strong cash position.
Business Information Services Witnessing Increasing Demand
S&P Global is well poised to benefit from growing demand for business information services. Consistent rise in volume of data from private and government organizations has augmented demand for improved enterprise-wide financial performance visibility. This apart, rising demand for news, information and analytics solutions is giving a boost to the business information services industry. Rising demand for risk mitigation also proved conducive to the industry.
Notably, changes in market dynamics are more or less a constant phenomenon and keep companies exposed to credit fund and operational risks. Accurate market and financial information is required for risk mitigation and that spurs demand for business information services. In the United States, steady economic growth, rise in corporate earnings on tax reforms, increased business spending have kept the industry in good shape.
S&P Global is continuously innovating, increasing differentiated content and developing new products backed by its acquisition strategies. So far this year, the company has acquired RateWatch, Kensho and Panjiva. RateWatch is a great addition to S&P Global’s bank data offering. Meanwhile, the Kensho buyout is expected to help S&P Global to improve its core operations by applying actionable insights through the use of AI solutions and sophisticated algorithms, thereby augmenting its efficacy.
Acquisition of Panjiva is likely to enhance the company’s Global Market Intelligence's data and analytical offerings for diverse customers across the globe, generating higher revenues.
Moving ahead, we expect S&P Global to continue adding advanced technology and data sets through acquisitions. This, in turn, should boost the company’s top- and bottom-line growth.
Strong Cash Position
Management has executed well in the recent times. This has helped S&P Global build cash, cash equivalents and restricted cash balance of $1.9 billion at the end of the second quarter of 2018, up from $1.8 billion at the end of the first quarter. This significant amount of cash gives S&P Global the flexibility to pursue any growth strategy.
The stock has an expected long-term earnings per share growth rate of 12.5% and a Growth Score of A. In the light of these positives, we believe that S&P Global should be retained by investors for now. The Zacks Rank #3 (Hold) carried by the stock seems to suggest the same.
The long-term expected EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Here's Why Investors Should Hold S&P Global (SPGI) Stock Now
Shares of S&P Global Inc. (SPGI - Free Report) have gained a massive 33.5% in a year’s time, outperforming the 26.5% rally of the industry it belongs to.We believe that the company has the potential to carry on with this outperformance, moving ahead.
Our optimism is backed by the company’s potential gain from increasing demand for business information services, acquisitions and a strong cash position.
Business Information Services Witnessing Increasing Demand
S&P Global is well poised to benefit from growing demand for business information services. Consistent rise in volume of data from private and government organizations has augmented demand for improved enterprise-wide financial performance visibility. This apart, rising demand for news, information and analytics solutions is giving a boost to the business information services industry. Rising demand for risk mitigation also proved conducive to the industry.
Notably, changes in market dynamics are more or less a constant phenomenon and keep companies exposed to credit fund and operational risks. Accurate market and financial information is required for risk mitigation and that spurs demand for business information services. In the United States, steady economic growth, rise in corporate earnings on tax reforms, increased business spending have kept the industry in good shape.
S&P Global Inc. Revenue (TTM)
S&P Global Inc. Revenue (TTM) | S&P Global Inc. Quote
Acquisition: A Key Growth Strategy
S&P Global is continuously innovating, increasing differentiated content and developing new products backed by its acquisition strategies. So far this year, the company has acquired RateWatch, Kensho and Panjiva. RateWatch is a great addition to S&P Global’s bank data offering. Meanwhile, the Kensho buyout is expected to help S&P Global to improve its core operations by applying actionable insights through the use of AI solutions and sophisticated algorithms, thereby augmenting its efficacy.
Acquisition of Panjiva is likely to enhance the company’s Global Market Intelligence's data and analytical offerings for diverse customers across the globe, generating higher revenues.
Moving ahead, we expect S&P Global to continue adding advanced technology and data sets through acquisitions. This, in turn, should boost the company’s top- and bottom-line growth.
Strong Cash Position
Management has executed well in the recent times. This has helped S&P Global build cash, cash equivalents and restricted cash balance of $1.9 billion at the end of the second quarter of 2018, up from $1.8 billion at the end of the first quarter. This significant amount of cash gives S&P Global the flexibility to pursue any growth strategy.
The stock has an expected long-term earnings per share growth rate of 12.5% and a Growth Score of A. In the light of these positives, we believe that S&P Global should be retained by investors for now. The Zacks Rank #3 (Hold) carried by the stock seems to suggest the same.
Key Picks
Some better-ranked stocks in the broader Business Services sector include Genpact Limited (G - Free Report) , WEX Inc. (WEX - Free Report) and Total System Services, Inc. . All the stocks carry 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 EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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