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S&P Global Inc. SPGI has been consistently impressing investors with its earnings performance over the last several quarters.
In a year’s time, shares of the company have gained 21.6%, outperforming the 18.9% rally of the industry it belongs to.
With an expected long-term earnings per share growth rate of 14.4% and a market cap of $48.7 billion, S&P Global seems to be a stock that investors should retain in their portfolio for now.
Factors Driving S&P Global’s Performance
Acquisition acts as a key catalyst to S&P Global and helps it continuously innovate, increase differentiated content and develop new products. So far this year, the company has acquired RateWatch, Kensho and Panjiva. These buyouts are expected to help it expand offerings, improve operations and increase revenues.
Management has executed well in the recent times. This has helped S&P Global build cash, cash equivalents and restricted cash of $1.9 billion at the end of second-quarter 2018. Also, the company generated $543 million cash from operating activities. Free cash flow was $488 million. This significant amount of cash provides S&P Global with the flexibility to pursue any growth strategy.
S&P Global Inc. Price and Consensus
S&P Global Inc. Price and Consensus | S&P Global Inc. Quote
Despite riding on significant growth prospects, S&P Global is not free from overhangs. Issuance in the United States and Asia has been lumpy for quite sometime and is weighing on the company’s top line. Moreover, it remains susceptible to proceedings, investigations and inquiries with respect to the ratings provided. However, we believe that addition of advanced technology and data sets through acquisitions will continue to boost S&P Global’s top and bottom line.
Zacks Rank & Stocks to Consider
Currently, S&P Global carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services sector include Broadridge Financial Solutions BR, Paychex PAYX and Core-Mark Holding Company CORE. While Broadridge sports a Zacks Rank #1 (Strong Buy), Paychex and Core-Mark carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share growth rate for Broadridge Financial Solutions, Paychex and Core-Mark is 10%, 8.4% and 13%, respectively.
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