Shares of IHS Markit Ltd. (INFO - Free Report) have surged 12.8% in the past year, outperforming the 8% rally of the Zacks S&P 500 Composite.
With expected long-term earnings per share growth rate of 10.7% and a market cap of $22 billion, IHS Markit seems is a stock that investors should retain in their portfolio for now.
What Bodes Well for IHS Markit?
IHS Markit’s offerings are well established across multiple industries and geographies. This enables the company to build strong customer relations over time. It prioritizes investments toward automotive, energy and financial services to improve offerings.
IHS Markit’s business model ensures solid recurring revenue generation capacity, low capital requirement, operational efficiency and financial discipline. The company’s depth and breadth of information and analytics is a key competitive differentiator.
Acquisitions are helping the company to expand offerings and strengthen international footprint. IHS Markit made three acquisitions in 2018 — Ipreo, DeriveXperts and PetroChem Wire. While DeriveXperts enhances the company’s derivatives data and valuations products, PetroChem Wire complements its OPIS product offerings. Ipreo is aimed at boosting the Financial services segment.
IHS Markit Ltd. Revenue (TTM)
Although IHS Markit is riding on growth prospects, it is not free from overhangs. The company experiences significant acquisition-related costs. Moreover, costs might escalate further as the company continues to invest in automotive, energy and financial services. Nevertheless, we believe that solid recurring revenue generation capacity, strong global customer base and acquisitions bode well for the company.
Zacks Rank and Key Picks
Currently, IHS Markit has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Business Services sector are Copart (CPRT - Free Report) , Booz Allen Hamilton (BAH - Free Report) and Automatic Data Processing (ADP - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term expected EPS (three to five years) growth rate for Copart, Booz Allen and Automatic Data Processing is 20%, 14.6% and 13%, respectively.
Zacks' Top 10 Stocks for 2019
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