Back to top

Image: Bigstock

S&P Global (SPGI) Q4 Earnings & Revenues Beat Estimates

Read MoreHide Full Article

S&P Global Inc. (SPGI - Free Report) reported solid fourth-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $2.53 beat the consensus mark by 4.9% and improved 14% year over year on the back of revenue growth and benefits of productivity initiatives, partially offset by investment spending, payments associated with the early retirement of company bonds, and a higher effective tax rate. 

Revenues of $1.74 billion beat the consensus estimate by 2% and improved 13% year over year.

Over the past year, shares of S&P Global have gained 52.8%, outperforming the 38.7% growth of the industry it belongs to and 21% rise of the Zacks S&P 500 composite. 

Segmental Revenues

Ratings revenues of $820 million increased 24% year over year. Non-transaction revenues improved 2% to $391 million on the back of increased fees associated with surveillance and intersegment royalties.  Transaction revenues increased 55% to $429 million, owing to strong bond rating activity partially offset by lower bank loan rating revenues.

Market Intelligence revenues were up 5% year over year to $502 million, primarily driven by solid growth in Data Management Solutions and Credit Risk Services.

Platts revenues rose 1% to $213 million.

S&P Dow Jones Indices revenues increased 9% to $233 million driven by increased asset-linked fees, partially offset by decreased derivatives trading activity.

Operating Results

Adjusted operating profit increased 14% year over year to $866 million. Adjusted operating profit margin improved 40 basis points (bps) to 49.9%.

Segment wise, Ratings adjusted operating profit increased 29% to $473 million. Adjusted operating profit margin improved 220 bps to 57.7%.

For Market Intelligence, adjusted operating profit declined 6% to $172 million. Adjusted operating profit margin decreased 410 bps to 34.4%.

Platts’ adjusted operating profit increased 6% to $107 million and adjusted operating profit margin increased 220 bps to 50.4%.

S&P Dow Jones adjusted operating profit increased 10% to $158 million. Adjusted operating profit margin improved 70 bps to 67.8%.

S&P Global Inc. Price, Consensus and EPS Surprise

 

S&P Global Inc. Price, Consensus and EPS Surprise

S&P Global Inc. price-consensus-eps-surprise-chart | S&P Global Inc. Quote

Balance Sheet and Cash Flow

S&P Global exited fourth-quarter 2019 with cash, cash equivalents, and restricted cash of $2.89 billion compared with $2.02 billion at the end of the prior quarter. Long-term debt came in at $3.95 billion compared with $2.97 billion in the prior quarter.

The company generated $1 billion of cash from operating activities in the reported quarter. Free cash flow was $923 million. Capital expenditures totaled $38 million.

Share Repurchases & Dividend Payout

The company returned $1.8 billion to shareholders in 2019 with $1.2 billion in share repurchases and $560 million in dividends.  As of Dec 31, 2019, the company had 4.7 million authorized shares available for repurchase. On Jan 29, 2020, the company’s board of directors approved an additional repurchase authority of 30 million shares.

On Jan 29, 2020, the company’s board of directors approved a 17.5% dividend hike, thereby increasing the quarterly cash dividend from 57 cents per share to 67 cents. The next dividend will be paid out on Mar 11, 2020, to shareholders of record on Feb 26, 2020.  The new annualized dividend rate is $2.68 per share.

2020 Guidance

S&P Global unveiled its full-year adjusted EPS guidance in the range of $10.40-$10.60. The current Zacks Consensus Estimate of $10.44 lies within the guided range.

Free cash flow excluding certain items is expected to be $2.6-$2.7 billion.

Zacks Rank & Upcoming Releases

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.

Investors interested in the broader Zacks Business Services sector are awaiting fourth-quarter 2019 earnings of key players like Delphi , Waste Management (WM - Free Report) and Republic Services (RSG - Free Report) , each scheduled to release results on Feb 13.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


Waste Management, Inc. (WM) - $25 value - yours FREE >>

Republic Services, Inc. (RSG) - $25 value - yours FREE >>

S&P Global Inc. (SPGI) - $25 value - yours FREE >>

Published in