S&P Global Sees 14% Revenue Growth, EPS Expected to Rise

S&P Global anticipates a strong 2024 with 14% revenue growth and impressive profitability. Is now the time to invest in SPGI? The stock shows solid performance but higher valuations could deter potential buyers.

Date: 03-03-2025

AI Rating: 6

Revenue Growth and EPS Outlook

S&P Global reported a remarkable 14% increase in revenue for 2024, totaling $14.2 billion. This growth is largely attributed to a 31% surge in the Ratings segment and a solid 6% rise in its Market Intelligence division, which remains its largest revenue source. Notably, the company has experienced consistent revenue growth over the past decade, with no yearly decline and an impressive cumulative growth of 178% since 2014.

Furthermore, the outlook for earnings per share (EPS) appears positive, as analysts project a compound annual growth rate of 11% from 2024 to 2027. This forecast indicates a steady growth trajectory, which can be a positive signal for potential investors.

Profit Margins

Another critical aspect to note is S&P Global's impressive profitability, boasting an adjusted operating margin of 49% last year. Such high margins, along with relatively low capital expenditures, suggest that the company is well-positioned to generate significant free cash flow. This free cash flow is essential for funding dividends and share buybacks, ultimately benefiting shareholders.

Market Position and Valuation Concerns

Despite S&P Global's strong performance, it is trading at a price-to-earnings (P/E) ratio of 42.6, which is 10% higher than its trailing 10-year average. Investors might find this valuation less attractive, particularly because the current P/E ratio is significantly higher than the anticipated growth rate. There is a concern that this could hinder the stock's potential to outperform the S&P 500 over the next five years.

In conclusion, S&P Global exhibits solid growth and profitability metrics, but its elevated valuation might deter some investors. While the company benefits from strong economic fundamentals and a durable competitive position, potential buyers may want to wait for a more attractive entry point.

Stocks: SPGI