Shares of S&P Global Inc. (SPGI - Free Report) have gained 43.4% over the past year compared with 17.6% growth of the industry and 3% rise 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 four quarters. While the 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.
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 demand for improved enterprise-wide financial performance visibility. Higher demand for news, information, and analytics solutions will drive market’s growth. 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 January 2020, the company completed the acquisition of ESG Ratings Business (from RobecoSAM). ESG Ratings Business boosts S&P Global's position as a premier resource for essential ESG Data, ratings, benchmarks and insights. In 2019, the company acquired 451 Research, Canadian Enerdata, Live Rice Index and Orion technology center. 451 Research is likely to strengthen S&P Global Market Intelligence's emerging technology expertise and offerings. 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 the company’s employees with access to the latest technologies and global communications infrastructure.
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 and Stocks to Consider
S&P Global currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Business Services sector are CoreLogic (CLGX - Free Report) , SPS Commerce (SPSC - Free Report) and SailPoint Technologies Holdings, Inc. (SAIL - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for CoreLogic, SPS Commerce and SailPoint is 12%, 15% and 15%, respectively.
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