S&P Global (SPGI) Gains on Acquisitions Amid Rising Costs

Global S&P SPGI has had an impressive performance over the last year, with its stock gaining 19.5%, outperforming the 17.4% gain of the industry it belongs to.

SPGI announced impressive first quarter results. Adjusted EPS (excluding 85 cents for non-recurring items) of $4 beat the Zacks Consensus Estimate by 9% and increased 27.3% year-over-year. Revenues of $3.5 billion exceeded the consensus estimate by 2.9% and improved 10.5% year-over-year.

S&P Global Inc. revenues (TTM)

S&P Global Inc. revenue-ttm | Quote from S&P Global Inc

How is SPGI doing?

S&P Global is well positioned to benefit from the growing demand for business information services. The growing amount of data from private and government organizations has led to greater visibility into enterprise-wide financial performance. The industry is benefiting from the growing demand for risk reduction. Accurate market and financial information is essential to mitigating risk and driving demand for business information services.

S&P Global seeks growth through strategic acquisitions, focusing on innovation, content expansion and product introductions. In 2023, the company acquired Market Scan Information Systems, Inc. and ChartIQ, which respectively enhance mobile services and strengthen S&P Global Market Intelligence.

We are impressed by S&P Global’s strategy of rewarding its shareholders through share repurchases and dividend payments. In 2023, S&P Global paid out $1.1 billion in dividends and $3.3 billion in buybacks. In 2022, S&P Global paid out $1 billion in dividends and $12 billion in buybacks. In 2021, S&P Global returned $743 million to shareholders in the form of dividend payments. These activities not only inspire investor confidence, but also have a positive impact on financial results.

S&P Global reports an increase in expenses due to investments in ongoing productivity programs, higher compensation costs resulting from investments in growth initiatives and the completion of acquisitions and higher incentive costs. In 2023, total costs increased by 3.4% year-on-year. As a result, the company’s financial performance is expected to remain under pressure in the future.

Zacks Rank and Stocks to Consider

S&P Global is currently sporting a Zacks Rank of #3 (Hold).

Some of the better-ranked stocks in the broader Zacks Business Services sector are companies AppLovin APPLICATION i VEX VEX.

AppLovin currently boasts a Zacks Rank of 1 (Strong Buy). You can see complete list of today’s Zacks #1 ranked stocks here.

APP expects long-term earnings growth of 20%. It delivered an earnings surprise of 60.9% over the trailing four quarters.

WEX currently has a Zacks Rank of 2 (Buy). The company expects long-term earnings growth of 12.4%.

WEX has delivered an average earnings surprise of 3.3% over the trailing four quarters.

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