Should Purchasing S&P Global Shares Be Considered at This Moment?
S&P Global's shares saw a significant surge following the release of its Q4 earnings, surpassing Wall Street estimates and posting a 14% YoY revenue increase. The financial services intelligence company's adjusted EPS also climbed 20% to $3.77. To sweeten the deal, S&P Global announced a robust outlook for the year ahead and a new share buyback authorization.
With the stock up 24% in the past year and hitting an all-time high, the question arises: can this rally continue? Let's dive into why S&P Global might be a buy now.
S&P Global's growth trajectory
S&P Global is a powerhouse in financial analytics, offering credit ratings, investment research, and index data. The company's strong performance can be attributed to a favorable economic environment and positive investor sentiment towards capital markets.
One key metric that highlights the company's momentum is the billed issuance, which reached an impressive $3.9 trillion in 2024 - a 54% increase from the previous year. This triumph reflects a combination of tight credit spreads and lower interest rates, paving the way for significant growth.
Revenue growth from ratings contributed 31% to the overall figure in 2024. This figure is noteworthy because of the diversification beyond investment-grade and high-yield debt into various loan and structured products. The latter category saw a 62% revenue increase compared to the previous year.
S&P Global's innovative offerings also continue to gain traction. Products like the CARFAX Car Listings data tracker, Energy Transition intelligence, and LNG Price Assessments insight are driving growth in the Vitality Index.
Revenue growth (YOY)
Artificial intelligence fueling growth
14%
S&P Global's efforts to integrate AI across its ecosystem are another driving force for its future growth. Innovations like the Spark Assist generative AI co-pilot aim to improve user productivity and add value to the platform. Management remains optimistic that these advancements position the company for sustainable, profitable growth.
5% to 7%
For 2025, the company expects revenue growth between 5% and 7%, and adjusted EPS in the range of $17.00 to $17.25, representing a 9% increase at the midpoint from the previous year's $15.70 result.
| Metric | 2024 | 2025 Estimate ||--------------|--------|----------------|| Revenue Growth (YOY) | 14% | 5% to 7% || Adjusted EPS | $15.70 | $17.00 to $17.25 |
Adjusted Earnings Per Share (EPS)
High-quality fundamentals
$15.70
S&P Global's strong earnings and consistent contract renewal rates positively influence its attractive valuation. The stock trades at a 31x forward price-to-earnings (P/E) ratio, which is modest compared to industry peers like Moody's and MSCI. Furthermore, S&P Global boasts a 52-year history of dividend increases, making it a "Dividend King."
$17.00 to $17.25
In January 2023, the company announced a quarterly dividend increase to $0.96 per share, preserving its annualized dividend rate, and launching a $4.3 billion share repurchase program, demonstrating its commitment to rewarding shareholders.
Concluding thoughts
Adjusted EPS growth (YOY)
While the stock's current valuation might be considered high, its strong earnings growth and robust guidance suggest that the valuation might be justified if S&P Global continues delivering on its projections. The company's focus on diversification, innovation, and customer satisfaction positions it well to face the challenges and opportunities in the financial services sector.
25%
With a strong market position, robust growth prospects, and a history of reliable dividends, the bullish case for S&P Global stock looks convincing. Investors confident in the company's ability to maintain its growth trajectory and manage its valuation can view S&P Global as a potential long-term investment.
8% to 10%
- The robust outlook for S&P Global in the year ahead, coupled with a new share buyback authorization, has led some investors to question if the stock's current rally can continue into 2024, given its 24% increase in the past year and an all-time high.
- To highlight S&P Global's momentum, one should consider the company's billed issuance, which reached an impressive $3.9 trillion in 2024, marking a 54% increase from the previous year, driven by tight credit spreads and lower interest rates.
- During the year 2024, revenue growth from ratings contributed 31% to S&P Global's overall figure, showcasing diversification into various loan and structured products, which saw a 62% revenue increase compared to the previous year.
- S&P Global's innovative offerings, such as CARFAX Car Listings data tracker, Energy Transition intelligence, and LNG Price Assessments insight, are driving growth in the Vitality Index, further contributing to the company's financial success.
