S&P Global (SPGI +1.24%) is best known for its credit ratings and indexes, but it also has a strong institutional consulting and analytics arm.
Its Market Intelligence business, which provides data, analytics, and insights for companies, is one of its largest revenue drivers, generating $1.3 billion in revenue last quarter, an 8% year-over-year increase.
It also has an energy consulting business, formerly known as Plattʻs, that provides data on energy and commodities.
In addition, it has S&P Mobility, which was formed in 2022 after S&P acquired IHS Markit. This segment provides data and intelligence on the automobile industry.
Image source: Getty Images.
But as of July 1, Mobility will no longer be part of S&P Global as it is being spun off into its own company, Mobility Global, which will trade on the New York Stock Exchange under the ticker MBGL.
What does this mean for S&P Global investors?
How the spin-off will benefit SPGI
The spin-off of the Mobility business has been in the works for more than a year now, but it was finalized in late May.
As part of the deal, S&P Global shareholders will receive one share of Mobility Global common stock for every share of S&P Global common stock held at the close of business on June 15. The distribution of Mobility Global shares is expected to be effective on July 1. Normal trading of Mobility Global stock will begin on July 1.
NYSE: SPGI
Key Data Points
Mobility is S&P Global's smallest business, generating about $454 million in revenue last quarter, up 8%, and $93 million in operating profit, up 9%. It was the slowest grower last quarter, profit-wise, but operating profits grew a robust 21% last year.
When the spinoff was first announced last year, S&P Global President and CEO Martina Cheung said it would allow the company to focus more on its core businesses -- credit ratings, indexes, market intelligence, and commodity insights. Further, it will simplify operations and free up resources for the company to pursue innovation, artificial intelligence initiatives, and growth opportunities within its other market-leading businesses.
93% of analysts say buy
Wall Street analysts are bullish on the spinoff, as SPGI has received price target upgrades in recent weeks from Goldman Sachs (GS +2.77%), JPMorgan Chase (JPM 0.91%), Wells Fargo (WFC 0.48%), and Mizuho Financial Group, among others.
Some 93% of analysts rate S&P Global stock as a buy with a median price target of $543 per share. That would suggest 28% upside for the stock over the next 12 months.
The stock price is down 18% this year, but it has been a consistent long-term performer due to its market leadership across multiple business segments. Over the past 10 years, it has had an average annualized return of 15%. Also, it is a Dividend King, with 53 straight years of dividend increases.
This blue chip winner is also about as cheap as it's been in a while, trading at just 21 times forward earnings.
Mobility was not a significant revenue generator for S&P Global, but spinning it off could spur more growth as the company focuses its resources on its market-leading core businesses.
