Shares of S&P Global Inc. (SPGI - Free Report) have gained 31.2% over the past year, outperforming the 10.3% growth of the industry it belongs to and 2.6% decline 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 last three quarters.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 (“Ratings”), S&P Global Market Intelligence ("Market Intelligence"), S&P Global Platts ("Platts") and S&P Dow Jones Indices ("Indices").
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.
In 2019, the company made acquisitions of ESG Ratings Business (from RobecoSAM), Canadian Enerdata, Live Rice Index and Orion technology center. ESG Ratings Business boosts S&P Global's position as a premier resource for essential ESG Data, ratings, benchmarks and insights. Canadian Enerdata enhances S&P Global's Platts division's energy analytical capabilities and strengthens its foothold in North American natural gas market. Live Rice Index is a great addition to S&P Global’s Platts global agriculture offering. Orion technology center provides access to the latest technologies and global communications infrastructure to the company’s employees.
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).
Some other top-ranked stocks in the broader Zacks Business Services sector are Interpublic (IPG - Free Report) , Omnicom (OMC - Free Report) and Genpact (G - Free Report) , each carrying a Zacks Rank #2. 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 Interpublic, Omnicom and Genpact is 4.5%, 5.6% and 11.9%, respectively.
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