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S&P Global Inc. SPGI has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth.
The company has an expected long-term (three to five years) earnings per share growth rate of 10%. Its earnings for 2021 and 2022 are expected to grow 12.3% and 8.7% year over year, respectively.
The stock has gained 33.1% year to date, significantly outperforming the 16.3% rally of the industry it belongs to.
S&P Global Inc. Price
S&P Global Inc. price | S&P Global Inc. Quote
Factors That Auger Well
S&P Global’s growth strategy targets improving its foundational capabilities and core businesses with a view to enhance and differentiate customer experience. The company is banking on its diverse workforce that helps it attain and apply technology and innovation, and also constantly improve the quality of service to its customers. S&P Global continues to focus on disciplined acquisitions, investments and partnerships, and is trying to improve product delivery across multiple channels to fend off growing competition and mitigate the impacts of the pandemic on its business.
S&P Global has a strong balance sheet. The company’s cash and cash equivalent of $5.2 billion at the end of the second quarter was well above the debt level of $4.1 billion, implying that the company has enough cash to meet this debt burden. Also, the company has no short-term debt. S&P Global's total-debt-to-total-capital ratio, which is an indicator of leverage, stood at 0.78. The figure was lower than the prior quarter’s reading of 0.87.
Commitment to shareholder returns makes the S&P Global stock a reliable investment to compound wealth over the long term. In 2020, 2019 and 2018, S&P Global paid $645 million, $560 million and $503 million in dividends, respectively. The company repurchased shares worth $1.2 billion both in 2020 and 2019, and $1.7 billion in 2018.
S&P Global is seeing an increase in expenses due to investments in ongoing productivity programs, higher compensation costs and completion of acquisitions. In the second quarter, total expenses of $952 million increased 13% year over year. During 2020, total expenses of $3.84 billion increased 9% year over year. Hence, the bottom line is likely to remain under pressure going forward.
Zacks Rank and Stocks to Consider
S&P Global currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Accenture ACN, Equifax EFX and TransUnion TRU, each carrying a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for Accenture, Equifax and TransUnion is 10%, 15.2% and 22%, respectively.
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Accenture PLC (ACN) : Free Stock Analysis Report
Equifax, Inc. (EFX) : Free Stock Analysis Report
TransUnion (TRU) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
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