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S&P Global (SPGI) Stock Rises 50.1% Year to Date: Here's Why

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Shares of S&P Global Inc. (SPGI - Free Report) have gained 50.1% on a year-to-date basis, outperforming the 35.9% rise of the industry it belongs to and 21.9% rally of the Zacks S&P 500 composite.

 

Let’s delve deeper into the factors which have contributed to the company’s outperformance.

Consecutive Earnings & Revenue Beat

S&P Global reported back-to-back earnings and revenue beat in the second and third quarters of 2019. While the company’s bottom line continued to gain from revenue growth and benefits of productivity initiatives, the top line performed well on the back of strength across all the segments namely S&P Global Ratings, S&P Global Market Intelligence, S&P Global Platts and S&P Dow Jones Indices.

Upbeat 2019 Guidance

S&P Global raised its 2019 guidance for adjusted earnings per share in the last two reported quarters.

During third-quarter 2019, the company raised its full-year adjusted EPS guidance to the range of $9.30-$9.40 from $9.10-$9.25 projected earlier.

Rising Demand for Business Information Services

S&P Global is gaining from increasing demand for business information services. Constantly increasing volume of data from private and government organizations has augmented the demand for improved enterprise-wide financial performance visibility. Higher demand for news, information, and analytics solutions will drive growth of the market. Further, the industry is benefiting from rising demand for risk mitigation. Changes in market dynamics are more or less a constant phenomenon and expose companies to credit fund as well as operational risks. Accurate market and financial information is required for risk mitigation, thereby spurring demand for business information services.

Strategic Acquisitions Bode Well

Acquisitions have been a key growth strategy for S&P Global, helping it continuously innovate, increase differentiated content and develop new products.

So far in 2019, S&P Global has completed three acquisitions namely Canadian Enerdata Ltd and Live Rice Index (LRI) in September and Orion technology center in July. Canadian Enerdata is expected to strengthen its natural gas offering across North America. While LRI is likely to extend the portfolio of agricultural price assessments, Orion is expected to provide access to the latest technologies and global communications infrastructure.

In 2018, the company acquired RateWatch, Kensho and Panjiva. RateWatch is a great addition to S&P Global’s bank data offering. The Kensho acquisition is helping 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. The Panjiva buyout enhanced the company’s Global Market Intelligence's data and analytical offerings for diverse customers across the globe, generating higher revenues.

The company is expected to continue adding advanced technology and data sets through acquisitions, which, in turn, should boost its top- and bottom-line growth.

Zacks Rank & Other Stocks to Consider

Currently, S&P Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics . While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2.

The long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 15.9% and 4%, respectively.

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