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S&P Global (SPGI) Tops Q2 Earnings & Revenues, Raises View

Maintaining its earnings beat streak for the 23rd straight quarter, S&P Global, Inc. SPGI reported solid second-quarter 2017 adjusted net income of $446 million or $1.72 per share compared with $385 million or $1.44 per share in the year-earlier quarter. Earnings comfortably beat the Zacks Consensus Estimate of $1.57. Rise in the bottom-line came on the back of robust organic revenue growth.

Revenues for the quarter were $1,509 million compared with $1,482 million in the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $1,447 million. Top-line growth was fueled by solid performance across all its segments.

Segmental Details

S&P Global Ratings segment’s revenues increased 10% year over year to $747 million, chiefly driven by increase in transaction revenues. The growth came on the back of substantial increase in high-yield bond, bank loan ratings and contract terms. Moreover, higher surveillance fees, entity fees and intersegment royalties from Market Intelligence and CRISIL drove non-transaction revenue growth. Adjusted operating profit remained flat at $397 million year over year.

S&P Global Market and Commodities Intelligence revenues declined 10% year over year to $606 million due to the sale of J.D. Power, the SPSE/CMA pricing businesses, and Equity and Fund Research last year.  In addition, the segment’s adjusted operating profit increased 3% to $191 million.

S&P Dow Jones Indices revenues rose 20% to $184 million in the reported quarter, mainly attributable to growth in asset-linked fees. Operating profit attributable to the company increased 19% to $119million.

Financial Aspects

As on Jun 30, 2017, S&P Global had cash and cash equivalents of $2,384 million while long-term debt was $3,566million. During the first six months of 2017, the company generated free cash flow excluding certain items of $635million. Cash provided by operating activities was $674 million.

During the second quarter, the company returned $251 million to shareholders. This was done through a combination of share repurchases and dividend payouts. It paid out $106 million in dividends and bought 1.1 million shares for $145 million.

Outlook

Concurrent with the earnings release, the company hiked its full-year 2017 adjusted earnings per share (EPS) guidance to $6.15–$6.30 from $6.00–$6.20. On a GAAP basis, EPS is expected to be in the range of $5.83 to $5.98 from the earlier expected range of $5.72−$5.92.

The company currently carries a Zacks Rank #2 (Buy)

Other Stocks to Consider

Some other stocks worth considering in the industry are ABM Industries Incorporated ABM, ManpowerGroup Inc. MAN and TransUnion TRU. ManpowerGroup sports a Zacks Rank #1 (Strong Buy) while ABM Industries and TransUnion both carry the same Zacks Rank as S&P Global. You can see the complete list of today’s Zacks #1 Rank stocks here.

ABM Industries has a decent earnings surprise history with an average positive surprise of 16.9% over the trailing four quarters, beating estimates thrice.

ManpowerGroup came up with three earnings beat in the trailing four quarters and has an average positive surprise of 4.5%.

TransUnion pulled off an average positive surprise of 11.8% over the trailing four quarters, beating estimates thrice.

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TransUnion (TRU): Free Stock Analysis Report
 
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ManpowerGroup (MAN): Free Stock Analysis Report
 
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