S&P Global (NYSE:SPGI) is one of the few financial sector stocks that trading positively for the year, currently up about 7.6%. By comparison, the S&P SPDR Financial ETF is down about 26.2% year-to-date.

While S&P Global is highly levered to the financial system, it doesn't lend money and doesn't have credit exposure. It sells data and analytics and has a robust business model. Let's find out a bit more about the stock and whether it's a good buy in these troubled times.

Image of financial data.

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First-quarter earnings were strong

The company reported first-quarter results earlier this week, with earnings per share increasing 59% year-over-year to $2.62. Revenue rose 14% to $1.8 billion. The first quarter in 2019 had a non-cash pension settlement charge of $113 million, which explains the difference in revenue and earnings growth. While these numbers are impressive, the company did offer some warning about the rest of the year. CEO Douglas L. Peterson had this to say about the results and the outlook:

While our first quarter results were strong, we anticipate that as the year progresses many of our customers will be increasingly [affected] by the economic impact of lockdowns and social distancing efforts to fight COVID-19. In addition, economic disruptions will likely impact fixed income issuance, equity markets, and oil markets.  Collectively, these events will likely affect new sales as well as renewals of subscriptions, negatively impacting our financial results compared to our original 2020 EPS guidance.

The ratings business led the charge for the first quarter as fixed income issuance increased. Ratings revenue was up 19% to $825 million. The bull market in stocks and equity derivatives pushed up volumes and fees, increasing indices revenue 19% to $259 million. Market Intelligence rose 8% to $519 million, and Platts rose 4% to $215 million. Growth was hitting on all cylinders in the first quarter.

But what about going forward? 

Going forward, the business will be impacted by COVID-19

Certainly in the ratings business, the untimely demise of the private-label residential mortgage-backed securities market will have an effect on S&P Global's ratings revenue. Many companies have taken down their lines of credit in order to increase liquidity, which probably means we will see a drop off in new bond issuance, especially in structured products.

The bear market in stocks and commodities may also have an effect on the other businesses as well. The baseline scenario envisions a U-shaped recovery which begins in the third quarter. S&P Global is adding new products that cover China and the environmental, social, and governance (ESG) space, so growth from new initiatives should help offset the drag from the recessionary economy.

S&P Global will be less affected than the rest of the financial sector

Despite the potential future weakness in these businesses, S&P Global is in a much more favorable position than the banking sector, which will experience a deterioration in credit. The real estate investment trust (REIT) sector will also suffer more than S&P Global as tenants stop paying rent and expiring leases go unfilled. Mortgage and consumer financials are going to suffer from non-performing assets and an inability to sell structured products. Even insurance is at least somewhat GDP-dependent. 

S&P Global is trading at 29 times the midpoint of the company's $9.95-$10.15 annual EPS guidance, referenced on the latest conference call earlier this week. The company pays a dividend; however, it isn't really a dividend stock. S&P Global's attraction is its intellectual property, which isn't easily copied. The next few months are not going to be a great time for the financials; however, if you want exposure to the sector, S&P Global is probably the safest way to play it. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.