Review S&P Global: global provider of credit ratings

Review S&P Global: global provider of credit ratings

S&P Global (NYSE: SPGI) is the world's leading provider of credit ratings, analysts in global capital and commodity markets, detailed data and analytical information on economic, market and business factors. The company develops the Dow Jones and S indices&P 500.

About company

The company identifies four areas of its business.

S&P Global Ratings. Conducts independent research and provides ratings, research results and analytics to investors and other market participants. Share of direction by results 9 months of 2021 amounted to 50%.

S&P Global Market Intelligence. Data Provider, research, news and analytics for multiple asset classes to investment managers, investment banks, private investment companies, insurance companies, commercial banks and other organizations. Share of direction by results 9 months of 2021 amounted to 27%.

S&P Global Platts. Leading independent provider of information and benchmark price estimates for commodity and energy markets. Share of direction by results 9 months of 2021 amounted to 11%.

S&P Dow Jones Indices. The world's largest global resource for index-based concepts, data and research. Stock Indices Developer S&P 500 and Dow Jones Industrial Average. The direction calculates more than 830 thousand indices, publishes benchmarks, which provide the basis for 575ETF around the world with $387 billion in invested assets. Share of direction by results 9 months of 2021 amounted to 15,42%.

Revenue structure by country and region:

  1. USA - 61%.
  2. European Union - 24%.
  3. Asia - 10%.
  4. The rest of the world - 5%.

Revenue structure by areas, million dollars

9м2020 9м2021 share The change
Ratings 2,725 3,107 50% 14,02%
Market analysis 1,565 1,664 27% 6,33%
Platts 0,654 0,700 11% 7,03%
Indexes 0,733 0,846 14% 15,42%
Elimination of cross-industry links −0,102 −0,108 −2% 5,88%
Total income 5,575 6,209 100% 11,37%

Financial indicators

26 October, the company published a report for 9 months of 2021. Revenue increased by 11% — up to $6.2 billion — compared to the same period last year. The fastest growing segments: indexes - increased by 16% — and ratings — increased by 14%. Revenue growth in the rankings was driven by higher transaction and non-operating revenues. Growth in index revenue was driven by higher levels of assets managed by ETFs and mutual funds.

Operating profit increased by 12% - up to 3.3 billion dollars, despite rising costs, associated with the merger S&P Global with IHS Markit in 2021. Operating margin increased by 5 percentage points to 53,42%. Net profit amounted to 2.5 billion, and net earnings per share 9,76 $. Free cash flow at the end 9 months of 2021 amounted to 2.4 billion, which is 214 million more, than the same period in 2020, mainly due to an increase in net profit.

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The company expects to complete its merger with IHS Markit in 2022. In November 2020 S&P Global agrees to acquire IHS Markit for $44bn. Expected, that by the reporting period for 2021, revenue S&P Global to grow to over 10 million. Earnings per share forecast is expected to be in the range of 12.5 to 12,65 $. Free cash flow forecast, except for some articles, also increased to a new range from 3,6 up to 3.7 billion.

Financial performance of the company, million dollars

Revenue Operating profit Operating margin Net profit FCF
2016 5,661 3,341 59,02% 2,106 1,329
2017 6,063 2,583 42,60% 1,496 1,782
2018 6,258 2,790 44,58% 1,958 1,797
2019 6,699 3,226 48,16% 2,123 2,500
2020 7,442 3,617 48,60% 2,339 3,300
9м2021 6,209 3,317 53,42% 2,527 2,454

Balance sheet indicators

Assets since the beginning of 2021 increased by 12,55% — up to 14.1 billion dollars — due to the growth of the amount of money in the accounts and their equivalents. capital has grown in 3,35 times - up to 1.9 billion - due to the growth of controlling shares, related to the takeover of other companies. Total debt increased by 14,59% — up to 4.7 billion.

In April, the company entered into a five-year, $1.5 billion negotiable loan agreement., which replaced a five-year credit line with 1.2 billion. Based on the results of 9 months of 2021, the company's net debt is negative -1.1 billion - due to an increase in the amount of money in the accounts and their equivalents.

Balance sheet indicators, million dollars

Assets Capital Total debt net debt
2016 38,936 0,701 3,564 1,172
2017 40,778 0,766 3,569 0,792
2018 42,401 0,684 3,662 1,745
2019 45,058 0,536 3,948 1,082
2020 12,537 0,571 4,110 0,002
9м2021 14,111 1,915 4,710 −1,189


The main segment of the company's revenue is ratings. Companies, to issue debt, e.g. bonds, you need to get a financial risk rating from a rating agency. The key players in the ratings industry are the Big Three S&P Global, Moody's and Fitch, which account for about 95% market.

The company expects, that global bond issuance will decline by about 0.2% in 2021 and by 2% in 2022. Concerns about rising inflation, rate hike prospects, still high cash holdings of companies and possible tax reform will all lead to headwinds for issuing bonds in 2022. But, as noted by the company, projections still in line with long-term growth rates.

In general, the ratings market has a number of features, worth mentioning. For example, financial services are not so dependent on regulatory standards, how, for example, banking sector. On the other hand, reputation is very important, as the market is represented by three major players. And the struggle for reputation is going on as in the information field, as well as in court.

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Respectively, investors should be prepared for news of litigation, associated with an incorrect estimate of S&P, the lack of transparency in the provision of ratings, and so on. But, as the hundred-year history of the existence of S&P Global, this will not have a significant impact on the financial stability of the company.

Other lines of business, such as market intelligence, there are also good medium-term prospects - largely due to the growth of interest in the stock market, caused by low rates and pandemic boredom. So, according to Bank of America and EPFR Global analysts, in 2021, investors have already invested almost $900 billion in exchange-traded and long-term funds, which exceeds the total amount for the last 19 years. Besides, new retail investors are very active, which also plays into the hands of representatives of stock market services, like S&P Global.

It is also worth mentioning the current takeover of IHS Markit. It is a major provider of data from such areas: derivatives market, hydrogen, solar energy, seaports, cars and others.

Acquisition of IHS Markit will increase SPGI's market share and maintain its position as the third largest data provider in the global market after Bloomberg and Refinitiv. Management expects synergies of $480m cost savings and $350m inflow from future earnings.

Review S&P Global: global provider of credit ratings

Review S&P Global: global provider of credit ratings

Review S&P Global: global provider of credit ratings

Comparison with analogues

As a comparison among analogues, we have chosen: MSCI, Moody’s, Thomson Reuters, FactSet.

The revenue growth rate will show, how successful the company is in its market, are its services in demand?. ROE and ROA ratios show the financial return on the use of a company's capital and assets, allow you to evaluate the quality of work of financial managers.

S&P Global Leads in Profitability, but the revenue growth rate lags behind the comparison leaders. In general, the company is effective and is not inferior to the main competitors..

Review S&P Global: global provider of credit ratings


2016 2017 2018 2019 2020 Mean
MSCI 51,46 90,27 207,56 −291,47 −160,8 −20,596
S&P Global 441,74 167,34 333,84 447,89 818,55 441,872
Moody’s −50,5 −273,5 244,63 234,27 129,73 56,926
Thomson Reuters 24,67 10,48 33,26 17,26 11,78 19,49
FactSet 65,94 47,66 50,77 55,46 45,25 53,016


2016 2017 2018 2019 2020 Mean
MSCI 8,66 9,71 14,19 15,66 14,65 12,574
S&P Global 24,85 16,82 21,44 20,49 20,54 20,828
Moody’s 5,19 13,87 14,67 14,64 15,23 12,72
Thomson Reuters 10,88 5,24 16,1 9,45 6,53 9,64
FactSet 33,54 19,91 19,84 23,05 19,1 23,088
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Comparison of company performance

Revenue, 2016 Revenue, 2020 Revenue growth rate ROA, average for 5 years ROE, average for 5 years
MSCI 1,15 1,695 8% 12,57% −20,59%
S&P Global 5,661 7,442 5,62% 20,82% 100%
Moody’s 3,604 5,371 8,31% 12,72% 56,92%
Thomson Reuters 11,166 5,984 −11,73% 9,64% 19,49%
FactSet 1,127 1,591 7,14% 23,08% 53,01%


Dividend yield S&P Global at the end of 2020 amounted to 2,41%. The share of dividend payments from net profit amounted to 25,85%, which gives the potential to increase dividends in the future. Growth rate of the dividend for the last 5 years was 13,23%. Average dividend yield per 5 years - 3,99%. The company's shares are included in the list of dividend aristocrats, that consistently pay and increase dividends by more than 25 consecutive years. The company has an active share buyback program, which will give additional returns to investors in the medium term.

Dividends of the company by year

Dividend per share Payout ratio Dividend yield Buyback Yield Total return
2016 1,44 $ 20,74% 1,34% 5,73% 7,07%
2017 1,64 $ 23,38% 0,97% 1,96% 2,93%
2018 2 $ 28,38% 1,18% 2,98% 4,16%
2019 2,28 $ 26,22% 0,84% 2,55% 3,39%
2020 2,68 $ 25,85% 0,82% 1,59% 2,41%

Company multipliers

As for the multipliers, companies in this industry are trading above the market average. Most multipliers S&P Global points to undervalued stocks, which allows you to consider the company for purchases at current levels.

Comparison with multipliers of other companies

P / E P / BV P / S EV / EBITDA
S&P Global 39,83 60,35 13,82 26,02
Moody’s 35,96 30,73 12,67 26,17
Thomson Reuters 9,33 4,15 9,62 22,40
FactSet 44,49 17,07 11,17 30,10
MSCI 79,23 39,09 28,14 52,11
Mean 41,77 30,28 15,08 31,36
Potential to rise or fall +5% −50% +9% +21%

What's the bottom line?

Summing up, worth saying, that S&P Global is interesting for its line of business, which will be profitable until then, as long as the financial market exists.

Based on the results of 9 months, the company showed good reporting, revenue and profit growth. The company is quite efficient, so that we can make a choice among analogues in her favor.

Markets S&P Global has long been held, and a significant increase in financial performance should not be expected from it. At the same time, the company sees room for growth through M&A. Taking into account the estimate by multipliers S&P Global, shares can be recommended to conservative investors in long-term investment portfolios to receive dividends.

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