Over the last six months, S&P Global’s shares have sunk to $405.30, producing a disappointing 5.5% loss - a stark contrast to the S&P 500’s 16.2% gain. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy S&P Global, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is S&P Global Not Exciting?
Even though the stock has become cheaper, we don’t have much confidence in S&P Global. Here are two reasons why SPGI doesn’t excite us, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
Unfortunately, S&P Global’s 4% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the financials sector.
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
S&P Global’s EPS grew at 8.5% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
S&P Global isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 21.5× forward P/E (or $405.30 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward our favorite semiconductor picks and shovels play.
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