S&P Global (SPGI) Beats on Q3 Earnings, Ups '19 EPS View
S&P Global Inc. SPGI reported solid third-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $2.46 beat the consensus mark by 13 cents and improved 16% year over year on the back of revenue growth and benefits of productivity initiatives. Revenues of $1.69 billion beat the consensus estimate by $33.2 million and improved 9% year over year.
So far this year, shares of S&P Global have gained 46.3%, outperforming the 37.5% rise of the industry it belongs to and 20.1% rise of the Zacks S&P 500 composite.
Ratings revenues of $789 million increased 13% year over year on the back of strong high-yield issuance in the United States and Europe and strong U.S. investment-grade issuance. Transaction revenues of $402 million increased 25%, driven by solid debt rating activity and increase in bank loan rating activity. Non-transaction revenues improved 2% to $387 million.
Market Intelligence revenues were up 5% year over year to $488 million, primarily driven by solid growth in Data Management Solutions, Credit Risk Solutions and Desktop.
Platts revenues rose 4% to $212 million owing to growth in both core subscription business and Global Trading Services.
S&P Dow Jones Indices revenues increased 14% to $232 million driven by 17% gain in asset-linked fees and 12% increase in exchange-traded derivative fees.
S&P Global Inc. Revenue (TTM)
Adjusted operating profit increased 14% year over year to $877 million. Adjusted operating profit margin improved 230 basis points (bps) to 51.9%.
Segment wise, Ratings adjusted operating profit increased 19% to $472 million. Adjusted operating profit margin improved 340 bps to 59.9%.
For Market Intelligence, adjusted operating profit declined slightly to $167 million. Adjusted operating profit margin decreased 160 bps to 34.3%.
Platts’ adjusted operating profit increased 5% to $107 million and adjusted operating profit margin increased 40 basis points to 50.7%.
S&P Dow Jones adjusted operating profit increased 19% to $163 million. Adjusted operating profit margin improved 280 bps to 70.1%.
S&P Global Inc. Price, Consensus and EPS Surprise
Balance Sheet and Cash Flow
S&P Global exited third-quarter 2019 with cash, cash equivalents, and restricted cash of $2.02 billion compared with $1.92 billion at the end of the prior quarter. Long-term debt came in at $2.97 billion compared with $3.66 billion in the prior quarter.
The company generated $762 million of cash from operating activities in the reported quarter. Free cash flow was $690 million. Capital expenditures totaled $31 million.
Share Repurchases & Dividend Payout
During the third quarter of 2019, the company returned $640 million to shareholders. This includes $500 million through share repurchases (through an accelerated share repurchase (ASR) that was initiated in August) and $140 million in dividends.
S&P Global raised its full-year adjusted EPS guidance from the range of $9.10-$9.25 to the range of $9.30- $9.40. The current Zacks Consensus Estimate of $9.23 lies within the guided range.
Zacks Rank & Upcoming Releases
Currently, S&P Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Clean Harbors CLH, Aptiv APTV and Republic Services RSG, each scheduled to release results on Oct 30.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
Click to get this free report
S&P Global Inc. (SPGI): Free Stock Analysis Report
Clean Harbors, Inc. (CLH): Free Stock Analysis Report
Republic Services, Inc. (RSG): Free Stock Analysis Report
Aptiv PLC (APTV): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.