Shares of S&P Global Inc. SPGI scaled a 52-week high of $357.07 in the trading session on Jul 15, before closing a tad lower at $354.80.
The company’s shares have charted a solid trajectory, appreciating 29.9% year to date, ahead of 13.5% growth of the industry it belongs to and in contrast to 0.5% decline of the Zacks S&P 500 composite.
Notably, S&P Global has witnessed a 19.9% rise in share price since it posted first-quarter 2020 results.
Let’s find out what’s supporting the uptick.
Consecutive Earnings & Revenue Beat
S&P Global reported back-to-back earnings and revenue beat in the last four quarters. While the bottom line continued to gain from revenue growth and benefits of productivity initiatives, the top line performed well on the back of strength across all segments, namely S&P Global Ratings, S&P Global Market Intelligence, S&P Global Platts and S&P Dow Jones Indices.
Rising Demand for Business Information Services
S&P Global is gaining from rising demand for business-information services. Constantly increasing volume of data from private and government organizations has augmented demand for improved enterprise-wide financial-performance visibility. Higher demand for news, information, and analytics solutions will drive the market’s growth. Further, the industry is benefiting from rising demand for risk mitigation. Changes in market dynamics are more or less a constant phenomenon and expose companies to credit fund as well as operational risks. Accurate market and financial information is required for risk mitigation, thereby spurring demand for business-information services.
Strategic Acquisitions Bode Well
Acquisitions have been a key growth strategy for S&P Global, helping it continuously innovate, increase differentiated content and develop new products.
In January 2020, the company completed the acquisition of ESG Ratings Business (from RobecoSAM), thus boosting its position as a premier resource for essential ESG Data, ratings, benchmarks and insights. In 2019, the company acquired 451 Research, Canadian Enerdata, Live Rice Index and Orion technology center. 451 Research is likely to strengthen S&P Global Market Intelligence's emerging technology expertise and offerings. Canadian Enerdata enhances S&P Global Platts division's energy analytical capabilities and strengthens its foothold in the North American natural gas market. Live Rice Index is a great addition to Platts’ global agriculture offering. Orion technology center provides the company’s employees with access to the latest technologies and global communications infrastructure.
The company is expected to continue adding advanced technology and data sets through acquisitions, which in turn should boost its top- and bottom-line growth.
Zacks Rank and Stocks to Consider
S&P Global currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign DOCU, SailPoint Technologies Holdings, Inc. SAIL and ManpowerGroup MAN. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SailPoint and ManpowerGroup is 31.2%, 15% and 1.5%, respectively.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.