S&P Global Inc. SPGI reported better-than-expected third-quarter 2020 results.
Adjusted earnings per share of $2.85 beat the consensus mark by 8% and improved 16% year over year on the back of revenue growth, productivity programs, and reduced expenses from COVID-19-related management actions.
Revenues of $1.85 billion beat the consensus estimate by 5.4% and improved 9% year over year.
So far this year, shares of S&P Global have gained 22.1% against 4.3% decline of the industry it belongs to. Meanwhile, the Zacks S&P 500 composite has gained 5.8%.
.jpg)
Let’s check out the numbers in detail.
Segmental Revenues
Ratings revenues of $894 million increased 13% year over year owing to solid bond issuance partially offset by lower bank loan rating activity. Transaction revenues grew 22% to $490 million, owing to strong bond issuance among U.S. corporates, global sovereigns, and U.S. public finance. Non-transaction revenues improved 4% to $404 million.
Market Intelligence revenues were up 9% year over year to $530 million, primarily driven by growth in Data Management Solutions, Credit Risk Solutions, and Desktop and the inclusion of 451 Research.
Platts revenues rose 5% to $222 million, backed by growth in the core subscription business partially offset by lower Global Trading Services activity.
S&P Dow Jones Indices revenues increased 1% to $234 million, backed by modest gains in asset-linked fees and data and custom subscriptions. These were partially offset by reduced exchange-traded derivative fees.
SP Global Inc. Revenue (TTM)
SP Global Inc. revenue-ttm | SP Global Inc. Quote
Operating Results
Adjusted operating profit margin improved 100 basis points (bps) to 52.9%, owing to revenue growth, productivity programs and reduced expenses from coronavirus-related management actions.
Segment wise, Ratings adjusted operating profit increased 16% to $552 million. Adjusted operating profit margin improved 130 bps to 61.8%.
Market Intelligence adjusted operating profit increased 14% to $179 million. Adjusted operating profit margin improved 160 bps to 33.8%.
Platts’ adjusted operating profit increased 10% to $124 million and adjusted operating profit margin increased 280 bps to 55.7%.
S&P Dow Jones adjusted operating profit decreased 7% to $153 million. Adjusted operating profit margin declined 510 bps to 65.2%.
SP Global Inc. Price, Consensus and EPS Surprise
SP Global Inc. price-consensus-eps-surprise-chart | SP Global Inc. Quote
Balance Sheet and Cash Flow
S&P Global exited third-quarter 2020 with cash, cash equivalents, and restricted cash of $3.17 billion compared with $2.68 billion at the end of the prior quarter. Long-term debt was $4.11 billion compared with $3.95 billion at the end of the prior quarter.
The company generated $809 million of cash from operating activities in the reported quarter. Free cash flow was $733 million.
During the reported quarter, the company returned $172 million to shareholders. This included $161 million in dividends and $11 million in share repurchases (which marked the ending of the share repurchase program initiated in February of this year).
2020 Guidance
S&P Global raised its full-year adjusted EPS guidance in the range of $11.30-$11.45 from the prior guidance of $10.75-$10.95. The current Zacks Consensus Estimate of $11.17 lies below the updated guidance range.
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.
Performance of Other Business Services Companies
Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and improving 26.4% on a year-over-year basis. The reported figure exceeded the guided range of $1.30-$1.40.
The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and improved 8.2% on a year-over-year basis.
IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and improved 1.9% on a year-over-year basis. The reported figure was above the guided range of $1.47-$1.55.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Equifax, Inc. (EFX): Free Stock Analysis Report
Interpublic Group of Companies, Inc. The (IPG): Free Stock Analysis Report
SP Global Inc. (SPGI): Free Stock Analysis Report
IQVIA Holdings Inc. (IQV): 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.
