S&P Global Hits New 52-Week High On Strong Growth Drivers
Zacks Investment Research | Jun 07, 2017 09:00PM ET
Shares of business services provider S&P Global Inc. (NYSE:SPGI) hit a new 52-week high of $193.50 on Jun 7, before closing the trading session considerably lower at $146.01, for a healthy year-to-date return of 35.8%.
S&P Global’s share price has been on a steady uptrend since Jan 1. In the last one month, the stock has been on a significant uptrend. Owing to its strong price appreciation, this stock carries a Zacks Rank #2 (Buy). The stock currently has a long-term earnings growth expectation of 12.33%.
Growth Drivers
S&P Global is focusing on its core business, which is helping it emerge as a leader among rating providers, benchmark providers and analytics in the global capital as well as commodity markets. It completed several business divestitures in third-quarter 2016 including the sale of J.D. Power, its two pricing businesses SPSE and CMA, and the equity research business. The impact of these divestitures was seen in its first-quarter results as well.
The company completed the acquisition of SNL Financial for $2.2 billion. It is a strategic fit for S&P Global as its business is in sync with the S&P Capital IQ and Platts businesses, which will help the company avail cost cuts and revenue synergies. Moreover, it will enable global expansion on a greater scale especially within the banking and insurance sectors as media and real estate areas emerge as new opportunities. The acquisition will generate synergies of $70 million of EBITDA (earnings before interest, tax, depreciation and amortization) by 2019 and a tax benefit (net present value) of $550 million. It will also be accretive to adjusted earnings per share in 2017 and earnings on a GAAP basis in 2018.
SNL Financial delivered consistent mid-teens revenue growth for the last 10 years. Also, the company’s subscription-based revenue model with high renewal rates and strong future revenue visibility bodes well for S&P Global.
The company has outperformed the Zacks Investment Research
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