Insights

• S&P Global exhibits strong revenue growth and profitability, with margins significantly above the industry average.
• The company maintains a conservative capital structure with low financial leverage and strong debt service capacity.
• Potential short-term liquidity issues are mitigated by strong cash flow generation.
• The planned spin-off of the Mobility division could impact future financial performance.
• The company faces risks from cybersecurity threats, regulatory changes, and the transition to a low-carbon economy.

Analysis

• Revenue - S&P Global has demonstrated consistent revenue growth, driven by strong market demand and effective sales strategies. - The sales/revenue experienced positive growth in 6 of the last 8 quarters, with a 3-year CAGR of 18.68% and a 5-year CAGR of 15.95%. - The enterprise value to sales ratio of 11.82 is above the industry average, suggesting a premium valuation.
  • Profitability
    • The company exhibits strong profitability, with a net profit margin of 28.86% and an EBITDA margin of 52.05%, both significantly above the industry average.
    • The gross profit margin of 61.72% is also higher than the industry average, indicating efficient operations.
    • EBIT and net income have shown strong upward trends, reflecting improved operational efficiency and profitability.
  • Liquidity
    • The current ratio of 0.9 and quick ratio of 0.9 are below the industry average and less than 1, suggesting potential short-term liquidity issues.
    • However, the company's strong cash flow generation mitigates this concern.
  • Solvency
    • S&P Global maintains a conservative capital structure, with a total debt to total equity ratio of 36.03% and a debt/EBITDA ratio of 1.6, both significantly below the industry average.
    • This indicates low financial leverage and strong debt service capacity.
  • Operational Efficiency
    • The company has demonstrated effective expense management, controlling operating expenses while increasing revenue.
    • Return on average assets (6.57%) and return on average invested capital (8.63%) are above the industry average, indicating efficient use of assets.
  • Cash Flow Analysis - Net operating cash flow decreased in the most recent quarter due to changes in working capital, but free cash flow has been consistently positive, demonstrating the company's ability to generate cash. - The company's capital allocation strategy has balanced organic growth, M&A, and shareholder returns.
  • Risk Factors
    • The company faces risks from cybersecurity threats, data privacy/protection regulations, and the transition to renewable energy and a net zero economy.
    • Regulatory changes, such as the EU's Benchmark Regulation and MiFID II, can increase compliance costs and impact the company's operations.
  • Future Outlook
    • Expect continued revenue growth, driven by market demand and strategic initiatives.
    • Profitability margins are likely to remain strong, supported by effective expense management.
    • The planned spin-off of the Mobility division could impact future financial performance.

Benchmarks (as of 2025-05-20)

• Performance Comparison:

  • Over the past three years, S&P Global, Inc. (SPGI) has generally underperformed the Consumer Discretionary Select Sector SPDR Fund (XLY). As of the latest data, the year-to-date performance shows SPGI outperforming XLY by 7.89% (5.73% vs. -2.16%). However, when looking at longer timeframes such as 1 year, 2 years and 3 years, SPGI has underperformed XLY by 2.31% (19.78% vs 22.09%), 2.59% (42.79% vs 45.38%) and 3.7% (53.16% vs 56.86%) respectively.
  • The consistency of SPGI's performance relative to XLY has varied. While SPGI has shown periods of outperformance, particularly in the short term (Year To Date and 1 Week), it has generally lagged behind XLY over longer periods.

• Risk and Return Analysis:

  • The annualized returns for SPGI have been lower than those of XLY across the 1-year, 2-year, and 3-year periods. For example, the 3-year annualized return for SPGI is 15.27%, compared to 16.19% for XLY.
  • The annualized volatility of SPGI has generally been lower than that of XLY. For instance, in Q2 2022, SPGI's volatility ranged from 31.92% to 37.77%, while XLY's ranged from 43.27% to 48.63%. This indicates that SPGI is typically less volatile than XLY.
  • The maximum drawdown for SPGI was -39.76% on 10/14/2022, while for XLY it was -39.67% on 12/28/2022. These figures suggest that both assets have similar levels of downside risk, although the timing of the maximum drawdowns differed.

• Risk-Adjusted Performance:

  • The Sharpe Ratio of SPGI has generally been lower than that of XLY, indicating that XLY has offered better risk-adjusted returns over the observed period.
  • The Beta value of SPGI has generally been around or below 1, while the Beta of XLY has consistently been above 1. This suggests that SPGI is less sensitive to market movements compared to XLY.

• Overall Assessment:

  • SPGI has shown periods of outperformance in the short term, but has generally underperformed XLY over longer periods. SPGI exhibits lower volatility and a lower beta compared to XLY, indicating a more conservative risk profile. However, XLY has provided better risk-adjusted returns, as reflected in its higher Sharpe Ratio.
  • Recent trends indicate that SPGI's beta has been below 1, suggesting it has become less sensitive to market movements. Investors seeking lower volatility and a more stable investment may find SPGI more appealing, while those willing to accept higher volatility for potentially higher returns may prefer XLY.

Peers Price History(as of 2025-05-20)

• Performance Comparison:

  • S&P Global (SPGI) has shown mixed performance compared to its peer companies, Nasdaq (NDAQ) and MSCI Inc. (MSCI). Over the past year, SPGI has underperformed NDAQ by 13.08% but has outperformed MSCI by 5.45%. Looking at the 3-year performance, SPGI has underperformed NDAQ by 20.49% but outperformed MSCI by 11.73%. More recently, year-to-date, SPGI has underperformed NDAQ by 0.31% and outperformed MSCI by 9.47%. These figures indicate that while SPGI has struggled to keep pace with NDAQ's growth, it has generally provided better returns than MSCI over both short and long time horizons.

• Risk and Return Analysis:

  • The annualized returns show that SPGI has provided lower returns than NDAQ but higher returns than MSCI over 1, 2, and 3-year periods. For example, the 3-year annualized return for SPGI is 15.27%, compared to 20.2% for NDAQ and 12.25% for MSCI.
  • In terms of annualized volatility, SPGI's volatility has generally been moderate and similar to NDAQ's, while MSCI has exhibited higher volatility. For instance, in Q2 2022, SPGI's volatility ranged from 31.92% to 37.77%, NDAQ's ranged from 29.70% to 34.05%, and MSCI's ranged from 45.12% to 50.27%. This indicates that MSCI is more sensitive to market changes.
  • The maximum drawdown for SPGI was -39.76% on 10/14/2022, for NDAQ it was -31.47% on 10/03/2023, and for MSCI it was -42.60% on 06/16/2022. MSCI experienced the largest drawdown, indicating higher risk during market downturns compared to SPGI and NDAQ.

• Risk-Adjusted Performance:

  • The Sharpe ratios indicate that NDAQ has generally offered better risk-adjusted returns compared to SPGI and MSCI. From Q4 2024 to Q2 2025, NDAQ consistently showed higher Sharpe ratios. For example, in Q1 2025, NDAQ's Sharpe ratio ranged from 1.11 to 2.29, while SPGI's ranged from 0.63 to 1.69, and MSCI's ranged from 0.02 to 0.67.
  • The beta values for SPGI and NDAQ were generally around or below 1, while MSCI's beta was consistently above 1 until recently. This suggests that MSCI was more volatile than the market, while SPGI and NDAQ were generally less volatile. From Q3 2024 to Q2 2025, the beta values for all three companies were below 1, indicating reduced sensitivity to market movements.

• Overall Assessment:

  • SPGI presents a mixed profile when compared to NDAQ and MSCI. While SPGI has outperformed MSCI in terms of historical performance and annualized returns, it has consistently underperformed NDAQ. In terms of risk, SPGI's volatility is similar to NDAQ's but lower than MSCI's, and its maximum drawdown is less severe than MSCI's.
  • NDAQ appears to offer better risk-adjusted returns, as indicated by its higher Sharpe ratios. SPGI's beta values suggest it is generally less sensitive to market movements than MSCI.
  • Recent trends indicate that all three companies have experienced reduced sensitivity to market movements, as their beta values have fallen below 1. NDAQ has shown better recent risk-adjusted performance compared to SPGI and MSCI.

Peers Fundamentals(as of 2025-03-31)

1. Market Position and Size:

   • S&P Global (SPGI) has a significantly larger market capitalization of $155380.35 million compared to Nasdaq (NDAQ) at $44884.86 million and MSCI at $43004.63 million.
   • SPGI's substantial market cap is supported by its higher revenue ($14493 million), gross income ($8892 million), EBITDA ($7123 million), and net income ($3952 million) compared to its peers.
   • SPGI holds a dominant market position within its peer group due to its significantly larger size and financial metrics, suggesting a stronger influence and broader scope of operations in the financial publishing and services industry.

2. Profitability and Efficiency:

   • SPGI's Gross Profit Margin of 61.35% is greater than the industry average of 54.32% and Nasdaq's 53.18%, but less than MSCI's 75.71%.
   • SPGI's EBITDA Margin of 49.15% is greater than the industry average of 39.14% and Nasdaq's 34.49%, but less than MSCI's 61.05%.
   • SPGI's Net Profit Margin of 27.27% is greater than the industry average of 17.3% and Nasdaq's 16.36%, but less than MSCI's 39.08%.
   • SPGI demonstrates strong profitability, outperforming the industry average and Nasdaq in key profitability metrics. However, MSCI exhibits superior margins, indicating higher efficiency in converting revenue to profit.

3. Financial Health and Stability:

   • SPGI's Current Ratio is 0.9, which is greater than MSCI's 0.84, but less than the industry average of 1.21.
   • SPGI's Quick Ratio is 0.9, which is greater than MSCI's 0.84, but less than the industry average of 1.21.
   • SPGI's Total Debt to Total Equity Ratio is 36.03%, which is less than Nasdaq's 84.65% and the industry average of 122.48%.
   • SPGI's Debt / EBITDA is 1.6, which is less than Nasdaq's 3.46%, MSCI's 2.55, and the industry average of 2.93.
   • SPGI exhibits a relatively conservative debt position compared to its peers and the industry average. However, its liquidity ratios are slightly below the industry average, suggesting a need for more efficient working capital management.

4. Valuation and Market Perception:

   • SPGI's Enterprise Value To Sales is 11.82, which is greater than Nasdaq's 6.79 and the industry average of 9.27, but less than MSCI's 16.54.
   • SPGI's Enterprise Value To EBITDA is 23.95, which is greater than Nasdaq's 19.53 and the industry average of 23.24, but less than MSCI's 27.01.
   • SPGI's Price To Earnings is 39.78, which is greater than Nasdaq's 35.45 and MSCI's 38.22, but less than the industry average of 52.05.
   • SPGI's Price to Book Ratio is 4.76, which is greater than Nasdaq's 3.89, but less than the industry average of 9.17.
   • SPGI's Price To Sales Ratio is 10.76, which is greater than Nasdaq's 5.8 and the industry average of 8.25, but less than MSCI's 14.8.
   • SPGI's valuation metrics suggest that it is relatively fairly valued compared to its peers, with some metrics above and some below the industry average.

5. Cash Flow and Capital Management:

   • SPGI's Net Operating Cash Flow is $5694 million, which is greater than Nasdaq's $2072 million and MSCI's $1503.23 million.
   • SPGI's Total Capital Expenditure is $143 million, which is less than Nasdaq's $217 million, but greater than MSCI's $123.74 million.
   • SPGI's Free Cash Flow is $5551 million, which is greater than Nasdaq's $1855 million and MSCI's $1379.48 million.
   • SPGI demonstrates strong cash flow generation capabilities, significantly outperforming its peers in net operating cash flow and free cash flow, indicating efficient operations and effective capital management.

6. Growth and Future Prospects:

   • SPGI shows consistently higher growth in EBITDA, Net Income, Basic Earnings per Share, Free Cash Flow, Free Cash Flow Margin, and EBIT Margin compared to the peer group average in the most recent year.
   • SPGI's 3-year CAGR is greater than its 5-year CAGR for Sales/Revenue, EBITDA, and Free Cash Flow, indicating accelerating growth in these areas. However, the opposite is true for Net Income, Basic Earnings per Share, and EBIT Margin, suggesting decelerating growth in these metrics.
   • SPGI's competitive position appears strong in terms of revenue and EBITDA growth, but weaker in terms of net income and earnings per share growth. The accelerating growth in revenue and EBITDA suggests that SPGI is effectively expanding its market presence and improving its operational efficiency. However, the decelerating growth in net income and earnings per share raises concerns about profitability and cost management.

7. Potential for Investment:

   • SPGI presents an attractive investment opportunity due to its size, strong cash flow, and conservative debt position. Its growth potential is evident in its accelerating revenue and EBITDA growth.
   • However, investors should be aware of its lower profitability and capital management efficiency compared to MSCI, as well as its slightly below-average liquidity ratios.

8. Key Risks and Considerations:

   • SPGI's liquidity ratios are slightly below the industry average, suggesting a need for more efficient working capital management.
   • SPGI's decelerating growth in net income and earnings per share raises concerns about profitability and cost management.
   • SPGI's revenue growth without corresponding profit growth could be a potential red flag, suggesting that SPGI may be facing challenges in converting revenue into profit.

9. Overall Assessment:

   • SPGI demonstrates strong overall financial health and performance relative to its peer group and industry averages. It has a dominant market position due to its significantly larger size and financial metrics. SPGI exhibits strong cash flow generation capabilities and a conservative debt position. However, it underperforms MSCI in profitability and capital management metrics, and its liquidity ratios are slightly below the industry average.