April 29, 2019

SPGI – Market expectations are for significant expansion in Uniform ROA, and management is confident in their Chinese subsidiary, growth, and data quality


  • S&P Global Inc. (SPGI:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings with a 31.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, and management is confident in the potential of their Chinese subsidiary, free cash flow and EPS growth, and data quality
  • Specifically, management is confident in their Chinese expansion, their existing relationships with Chinese clients, and the demand for independent analytics among Chinese investors. In addition, they are confident in their free cash flow, revenue, and adjusted EPS growth, and in the growth potential of their structured finance offerings, non-transaction subscription revenue, public finance issuances, and their RatingsXpress product. Moreover, they are confident in industry inflows into ETFs, Ratings segment pricing power, financial leverage optimization initiatives, and data quality. They are also confident in their Powering the Markets of the Future framework.
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