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S&P Global (SPGI) Beats on Q1 Earnings, Lowers EPS View
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S&P Global Inc. (SPGI - Free Report) reported solid first-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. Revenues of $1.79 billion beat the consensus estimate by 4.6% and improved 13.6% year over year.
Segmental Revenues
Ratings revenues of $825 million increased 19% year over year owing to solid issuance in the United States, in particular, record investment-grade issuance in March. Non-transaction revenues improved 6% to $393 million. Transaction revenues increased 33% to $432 million owing to an increase in global bond issuance and increased bank loan rating activity.
Market Intelligence revenues were up 8% year over year to $519 million, primarily driven by growth in Data Management Solutions, Credit Risk Solutions, and Desktop and the inclusion of 451 Research.
Platts revenues rose 4% to $215 million backed by growth in both core subscription business and Global Trading Services.
S&P Dow Jones Indices revenues increased 20% to $259 million driven by 59% growth in exchange-traded derivative fees and 11% increase in asset-linked fees.
S&P Global exited first-quarter 2020 with cash, cash equivalents, and restricted cash of $1.95 billion compared with $2.89 billion at the end of the prior quarter. Long-term debt of $3.95 billion was flat year over year.
The company generated $680 million of cash from operating activities in the reported quarter. Free cash flow was $618 million. Capital expenditures totaled $11 million.
During the reported quarter, the company returned $1.3 billion to shareholders including $1 billion through an ASR program that was initiated in early February, $150 million through open market share repurchases in January and February, and $161 million in dividends.
2020 Guidance
S&P Global lowered its full-year adjusted EPS guidance to the range of $9.95-$10.15 from the prior guidance of $10.40-$10.60. The current Zacks Consensus Estimate of $9.91 lies below the updated guidance.
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported first-quarter 2020 adjusted earnings of $1.40 per share, which beat the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup Inc. (MAN - Free Report) reported first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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S&P Global (SPGI) Beats on Q1 Earnings, Lowers EPS View
S&P Global Inc. (SPGI - Free Report) reported solid first-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. Revenues of $1.79 billion beat the consensus estimate by 4.6% and improved 13.6% year over year.
Segmental Revenues
Ratings revenues of $825 million increased 19% year over year owing to solid issuance in the United States, in particular, record investment-grade issuance in March. Non-transaction revenues improved 6% to $393 million. Transaction revenues increased 33% to $432 million owing to an increase in global bond issuance and increased bank loan rating activity.
Market Intelligence revenues were up 8% year over year to $519 million, primarily driven by growth in Data Management Solutions, Credit Risk Solutions, and Desktop and the inclusion of 451 Research.
Platts revenues rose 4% to $215 million backed by growth in both core subscription business and Global Trading Services.
S&P Dow Jones Indices revenues increased 20% to $259 million driven by 59% growth in exchange-traded derivative fees and 11% increase in asset-linked fees.
S&P Global Inc. Revenue (TTM)
S&P Global Inc. revenue-ttm | S&P Global Inc. Quote
Operating Results
Adjusted operating profit margin improved 580 basis points (bps) to 53.1%.
Segment wise, Ratings adjusted operating profit increased 41% to $521 million. Adjusted operating profit margin improved 1,010 bps to 63.1%.
For Market Intelligence, adjusted operating profit improved 5% to $160 million. Adjusted operating profit margin decreased 80 bps to 30.9%.
Platts’ adjusted operating profit increased 11% to $114 million and adjusted operating profit margin increased 320 bps to 52.9%.
S&P Dow Jones adjusted operating profit increased 21% to $183 million. Adjusted operating profit margin improved 90 bps to 70.6%.
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 first-quarter 2020 with cash, cash equivalents, and restricted cash of $1.95 billion compared with $2.89 billion at the end of the prior quarter. Long-term debt of $3.95 billion was flat year over year.
The company generated $680 million of cash from operating activities in the reported quarter. Free cash flow was $618 million. Capital expenditures totaled $11 million.
During the reported quarter, the company returned $1.3 billion to shareholders including $1 billion through an ASR program that was initiated in early February, $150 million through open market share repurchases in January and February, and $161 million in dividends.
2020 Guidance
S&P Global lowered its full-year adjusted EPS guidance to the range of $9.95-$10.15 from the prior guidance of $10.40-$10.60. The current Zacks Consensus Estimate of $9.91 lies below the updated guidance.
Currently, S&P Global carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported first-quarter 2020 adjusted earnings of $1.40 per share, which beat the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup Inc. (MAN - Free Report) reported first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>