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SPGI – Market expectations are for record-high Uniform ROA, but management may have concerns about growth, their merger, and product launches

August 26, 2021

  • S&P Global Inc. (SPGI:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 34.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their revenue growth, the IHS Markit merger, and recent product launches.
  • Specifically, management may have concerns about the potential of their newly launched climate credit analytics product, Marketplace Workbench, and ESG Dividend Aristocrats Index series. They may also lack confidence in their ability to sustain growth in diluted EPS, segment operating profit margin, and Market Intelligence, Platts, and Ratings revenue. Moreover, management may have concerns about CLO market demand and the pace of the global economic recovery, and they may be exaggerating the potential of their EU Climate Transition Index and the impact of their new Platts energy model’s 2-degree warming scenario. Furthermore, they may lack confidence in their ability to capitalize on their potential IHS Markit merger, control expenses, and maintain the number of assets and passive funds invested in their indices.