Shares of S&P Global (SPGI +3.53%) rallied sharply following the release of its fourth-quarter earnings report, which exceeded Wall Street estimates. For the period ended Dec. 31., the financial services intelligence giant posted a 14% year-over-year increase in quarterly revenue, while adjusted earnings per share (EPS) was up 20% to $3.77. If shareholders needed further good news, the company offered a strong outlook for the year ahead alongside a new share buyback authorization.
The trends are solid, but considering the stock is up 24% over the past year and currently trading at an all-time high, can the rally keep going? Let's discuss whether S&P Global stock is a buy now.
NYSE: SPGI
Key Data Points
A strong growth runway
S&P Global is recognized as a leader in financial analytics, including credit ratings, investment research, and index data. A resilient economic environment, coupled with positive investor sentiment toward capital markets, has been a tailwind for its business.
A key performance indicator highlighting the operating momentum is the billed issuance, reflecting the value of credit instruments rated. The figure reached a record $3.9 trillion in 2024, up 54% from the previous year, capturing favorable market conditions between tight credit spreads and lower interest rates.
Within the 31% year-over-year revenue growth contribution from ratings in 2024, an important dynamic is the ongoing diversification beyond the traditional focus on investment-grade and high-yield debt into other types of loans and structured products. This category generated a 62% increase in revenue compared to last year.
S&P Global is also seeing a strong response to its new offerings, referred to as its Vitality Index. In this case, products like the CARFAX Car Listings data tracker, Energy Transition intelligence, and LNG Price Assessments insight have gained traction.
Image source: Getty Images.
Innovation supports a positive outlook
Another major development for S&P Global has been its effort to integrate artificial intelligence (AI) functionality across its ecosystem. The initiative includes the Spark Assist generative AI co-pilot, which aims to enhance user productivity and the platform's value proposition.
Management comments have projected optimism that these recent innovations have positioned the company for durable, profitable growth. For 2025, the company is guiding for revenue growth between 5% and 7% against the particularly strong 2024 growth rate benchmark. The company's adjusted EPS target range of $17.00 to $17.25 represents a 9% increase at the midpoint from the $15.70 result in the previous year.
| Metric | 2024 | 2025 Estimate |
|---|---|---|
| Revenue growth (YOY) | 14% | 5% to 7% |
| Adjusted Earnings Per Share (EPS) | $15.70 | $17.00 to $17.25 |
| Adjusted EPS growth (YOY) | 25% | 8% to 10% |
Data source: S&P Global.
S&P Global's high-quality fundamentals
The attraction of S&P Global stock as a potential investment opportunity starts with an understanding that many of its data products and credit ratings coverage are often critical in the daily operations of its customer base. Institutional investors, banks, and asset managers rely on the specialized market intelligence from S&P Global, forming an ingrained and mutually beneficial commercial relationship.
The company's financial profile, defined by steady cash flows and high-quality earnings given historically strong contract renewal rates, helps justify a premium valuation. Shares of S&P Global are trading at 31 times its 2025 EPS estimate as a forward price-to-earnings (P/E) ratio. Notably, this level is at a modest discount to industry competitors like Moody's and MSCI that offer alternative solutions, trading at forward P/E ratios of 37 and 34, respectively. By this measure, S&P Global offers relatively good value, with a key advantage being its larger size and more diversified platform.
S&P Global also stands out as a "Dividend King," with an impressive 52-year history of increasing its dividend payment. The current quarterly rate of $0.96 per share yields 0.7%, which is coupled with a $4.3 billion share repurchasing authorization as part of the company's commitment to reward shareholders.
SPGI PE Ratio (Forward) data by YCharts
A bullish outlook
I'm bullish on shares of S&P Global going into 2025. Through its exposure to the broader themes of the financial services sector, as long as capital markets remain buoyed with low volatility and a steady rise in asset prices, the company is on track to achieve its earnings targets. Investors confident in the company's ability to consolidate market share have plenty of reasons to buy and hold S&P Global stock for the long run.
