Stock (Symbol) |
S&P Global (SPGI) |
Stock Price |
$144 |
Sector |
| Finance |
Data is as of |
| June 6, 2017 |
Expected to Report |
| Jul 26 |
Company Description |
 S&P Global Inc., formerly McGraw Hill Financial, Inc., is a provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets across the world. The Company operates its business through four segments: Standard & Poor’s Ratings Services (S&P Ratings), S&P Global Market Intelligence, S&P Dow Jones Indices (S&P DJ Indices) and S&P Global Platts. Source: Thomson Financial |
Sharek’s Take |
 I missed my opportunity to buy S&P Global (SPGI) and now the stock’s up big. When researching the company and how it works, I wasn’t able to comprehend the business model, then sat on my hands as SPGI went from $110 to almost $150. For more than 150 years S&P Global has been providing financial information and analytics. In 1860 Standard & Poor’s founder Henry Varnum Poor published History of Railroads and Canals in the United States which made public previously undisclosed financial statistics of railroads. Meanwhile during 1899-1909 James McGraw and John Hill started their own trade publishing companies, which were merged in 1917 following Hill’s death. McGraw-Hill went public in 1929 and in 1966 it acquired Standard & Poor’s, which had been publishing a version of the S&P 500 since the 1920s. In 1986 the company become the largest education publisher in the US, but in 2013 that all changed as the company sold off the entire educational division and bought back 18% of its company shares that year. Last year McGraw-Hill divested itself of J.D. Power, the Equity & Fund Research business, and changed its name to S&P Global to better describe the company’s focus on financials. It now has has four divisions: S&P Global Ratings (46% of 2015 sales), S&P Global Market Intelligence (26%), S&P Dow Jones Indicies (11%) and S&P Global Platts (18%). S&P Global has raised profit margins by digesting itself of the low-margin divisions, then and has used these funds for stock repurchases. Although sales grew just 7% in 2016, profits grew 18%. S&P Global has an Est. LTG of 12% and a yield of 1%. It is one of fewer than 25 companies in the S&P 500 to have increased their dividend for at least the last 44 years (with a compounded annual growth rate of 10% per year since 1974). The company has been public almost 100 years and its index-based information is needed for passive index-based investments that follow the S&P Dow Jones Indices. I made a mistake not buying it for Conservative Portfolio earlier, but now that the stock is high I hope it comes down so I can get in. |
One Year Chart |
 Last qtr S&P delivered sales growth of 8% (way better than the 2% 2QtrsAgo) and profit growth of 35%, which whipped estimates of 13%. SPGI seems to be underpromising to overdeliver, and estimates of slow profit growth is one reason I’m not in the stock. Qtrly profit growth is expected to slow to 8%, 6%, 16% and 4% the next 4 qtrs, and this makes it hard for me to buy high. |
Fair Value |
 My Fair Value on this stock is 21x earnings, which is $130. But SPGI’s 2017 profit estimates have been rising — from $5.84 to $6.02 and $6.19 the past three qtrs. So the stock could be selling for 20x 2017 profits right now — we just don’t know what 2017 profits will be. |
Bottom Line |
 S&P Global has had a great run in 2017 as the initiatives management put in place in the past are fueling profit growth. Stock buybacks have helped push profits as well. SPGI has a good Est. LTG of 12% per year plus a 1% yield with a dividend that’s increased since the 1970s. But with growth expected to slow and a P/E or 23 that’s higher than normal, I’m not going to buy high. SPGI is on the radar for the Conservative Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
