What to Consider Before Investing in S&P Global (SPGI)

Now trading at a price of $377.36, S&P Global has moved 0.6% so far today. In contrast, the S&P 500 index moved 0.8%. Read below for a basic value analysis of S&P Global.

S&P Global shares moved -11.2% over the last 52 weeks, with a high of $423.55 and a low of $279.32. During this time, the stock outperformed the S&P 500 index by 1.3%. As of January 2022, the company's 50-day average price is $352.0. S&P Global Inc., together with its subsidiaries, provides credit ratings, benchmarks, analytics, and workflow solutions in the global capital, commodity, and automotive markets. The large-cap Financial Services company has 22,091 full time employees and is based in New York, NY. S&P Global has returned a 0.9% dividend yield over the last 12 months.

The Company Has a Steady Stream of Strong Cash Flows:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $6,699 $7,442 $8,297
Revenue Growth n/a 11.09% 11.49%
Operating Margins 47.4% 48.4% 50.7%
Operating Margins Growth n/a 2.11% 4.75%
Net Margins 31.69% 31.43% 36.45%
Net Margins Growth n/a -0.82% 15.97%
Earnings Per Share $8.6 $9.66 $12.51
EPS Growth n/a 12.33% 29.5%
Free Cash Flow (MM) $2,661 $3,491 $3,563
FCF Growth n/a 31.19% 2.06%
Capital Expenditures (MM) -$115 -$76 -$35
Net Debt / EBITDA 0.36 0.03 -0.52

S&P Global Is Currently Fairly Valued:

Compared to the Financial Services sector's average of 13.34, S&P Global has a trailing twelve month P/E ratio of 32.3 and, according to its EPS guidance of 12.44, an expected P/E ratio of 30.3. S&P Global's PEG ratio is 2.36 based on its 13.67% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by S&P Global's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 2.47, which suggests that the company's shares are actually overvalued.

S&P Global's P/B ratio is 3.3 compared to its sector average of 1.95. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 132.5% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 10.26 * 114.079) = $162.28

S&P Global's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.

S&P Global Is the Subject of Mixed Market Indicators:

16 analysts are following S&P Global and have set target prices ranging from $377 to $434 per share. On average, they have given the company a rating of buy. At the current price of $377.36, SPGI is trading -6.01% away from its average analyst target price of $401.5 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 1.2% of the company's shares are tied to short positions. Institutions own 91.3% of S&P Global's shares, while the insider ownership rate stands at 0.19%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $11,035,804,795.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.