Stock to Watch: S&P Global Inc. (NYSE: SPGI)

On Friday, Shares of S&P Global Inc. (NYSE: SPGI) showed the bullish trend with a higher momentum of 0.92% to $175.23. The company traded total volume of 1,400,566 shares as contrast to its average volume of 1.90M shares. The company has a market value of $44.04B and about 251.30M shares outstanding.

S&P Global (SPGI) recently stated third quarter 2018 results with revenue of $1,546.0M, a boost of 2% contrast to the same period last year.  On an organic basis and excluding the unfavorable impact from foreign exchange, revenue also increased 2%.

Net income increased 20% to $495.0M and diluted earnings per share increased 22% to $1.95 as a result of revenue growth, operating leverage, and U.S. tax reform.  Adjusted net income increased 21% to $536.0M and adjusted diluted earnings per share increased 23% to $2.11. The adjustments in the third quarter of 2018 were for lease impairments, restructuring, a reduction in the provisional tax expense related to U.S. tax reform, deal-related amortization, and Kensho retention related expenses.

Return of Capital: During the third quarter, the Company returned $126.0M to shareholders in dividends and accomplished the $1.0B accelerated share repurchase (ASR) agreement initiated during the first quarter.  Starting later this month, the Company anticipates to initiate a new $500.0M ASR that will conclude no later than early February of 2019.

Ratings:  Revenue declined 5% to $700.0M in the third quarter.  Transaction revenue reduced 12% to $328.0M because of debt issuance reductions and lower bank loan ratings activity.  Financial Services was the only sector that grew in the quarter. Non-transaction revenue increased 1% to $372.0M because of growth in fees associated with surveillance and inter-segment royalties partially offset by lower Rating Evaluation Service activity. U.S. revenue reduced 6% and international revenue declined 4% with gains in EMEA offset by declines in Asia-Pacific, Latin America, and Canada.  International represented 43% of third quarter revenue.

Operating profit increased 6% to $395.0M and the operating profit margin improved 580 basis points to 56% contrast to the third quarter of 2017 as expense reductions related to lower incentives, productivity improvements, and a $15.0M restructuring expense in the prior period more than offset the decline in revenue.  Adjusted operating profit increased 1% to $396.0M and the adjusted operating profit margin improved 370 basis points to 57%.

S&P Dow Jones Indices:  Revenue increased 10% to $205.0M in the third quarter of 2018 due mainly to an 11% increase in asset-linked fees.  Revenue from ETFs is the leading component of asset-linked fees, and average ETF AUM associated with the Company’s indices increased 23%.  Revenue associated with data and custom subscriptions also contributed by increasing 12%.

Operating profit increased 13% to $134.0M and the operating profit margin improved 190 basis points to 65% because of revenue growth and operating leverage.  Adjusted operating profit increased 13% to $136.0M and the adjusted operating profit margin improved 190 basis points to 66%.  Operating profit attributable to the Company increased 15% to $98.0M.  Adjusted operating profit attributable to the Company increased 15% to $100.0M.

Market Intelligence:  Revenue increased 10% to $464.0M in the third quarter of 2018 with more than 10% growth in Risk Services and Data Management Solutions and mid-single digit organic growth in Desktop.  Quarterly operating profit increased 20% to $148.0M.  The operating profit margin improved 260 basis points to 32% as revenue gains outpaced expenses.  Adjusted operating profit increased 20% to $168.0M.  Adjusted operating profit margin improved 300 basis points to 36%.

Platts:  Revenue increased 5% to $204.0M with growth in the core subscription business partially offset by a decline in Global Trading Services because of reduced trading volumes in certain commodity products.  Quarterly operating profit increased 16% to $98.0M and the operating profit margin increased 450 basis points to 48% because of revenue growth and reduced expenses.  Adjusted operating profit increased 15% to $102.0M and adjusted operating profit margin improved 440 basis points to 50%.

Corporate Unallocated:  Corporate Unallocated includes corporate center revenue and non-allocated corporate expenses. Corporate Unallocated operating loss increased 39% to $71.0M because of Kensho expenses counting retention-related expenses. Corporate Unallocated adjusted operating loss reduced 25% to $35.0M because of a reduction in excess real estate costs, IT spend, and professional fees.

Balance Sheet and Cash Flow:  Cash, cash equivalents, and restricted cash at the end of the third quarter were $2.20B. In the first nine months of 2018, cash offered by operating activities was $1,401.0M, cash used for investing activities was $346.0M, and cash used for financing activities was $1,579.0M.  Free cash flow was $1,197.0M, a boost of $140.0M from the same period in 2017 mainly because of a boost in net income from revenue growth, improved cash collections on accounts receivable, and lower tax payments.  Free cash flow, excluding the after tax payment of legal settlements, was $1,404.0M.

The Company offered net profit margin of 27.10% while its gross profit margin was 72.70%. ROE was recorded as 309.90% while beta factor was 1.11. The stock, as of recent close, has shown the weekly upbeat performance of 3.11% which was maintained at 3.11% in this year.

Leave a Reply

Your email address will not be published. Required fields are marked *