Intrinsic Value S&P Global Inc. (0KYY.L)

• Previous Close: £528.97
• Intrinsic Value: £219.57
• Upside potential: -58%

Stock Valuation Context

Business Model And Market Position

S&P Global Inc. is a leading provider of credit ratings, benchmarks, analytics, and workflow solutions across global capital, commodity, and automotive markets. The company operates through six divisions, each specializing in distinct yet complementary services. S&P Global Ratings is a dominant force in independent credit ratings, while S&P Dow Jones Indices maintains critical benchmarks for institutional investors. S&P Global Commodity Insights delivers data-driven intelligence for energy and commodity markets, and S&P Global Market Intelligence offers comprehensive workflow solutions for financial decision-making. The Mobility and Engineering Solutions divisions provide specialized insights for automotive and industrial sectors, respectively. With a diversified revenue model anchored in subscriptions, licensing, and transaction-based services, S&P Global holds a defensible market position due to its entrenched industry standards, regulatory moats, and global scale. Its reputation for data integrity and analytical rigor reinforces its competitive edge in financial services, where accuracy and timeliness are paramount. The company’s multi-segment approach mitigates cyclical risks while capitalizing on long-term trends like ESG integration and digital transformation in financial markets.

Revenue Profitability And Efficiency

S&P Global reported FY revenue of $14.21 billion, with net income of $3.85 billion, reflecting a robust net margin of approximately 27%. Diluted EPS stood at $12.35, underscoring strong profitability. Operating cash flow reached $5.69 billion, significantly outpacing capital expenditures of $124 million, indicating high cash conversion efficiency. The company’s asset-light model and recurring revenue streams contribute to stable cash generation.

Earnings Power And Capital Efficiency

The company’s earnings power is evident in its high-margin segments, particularly Ratings and Indices, which benefit from scalable infrastructure and low incremental costs. ROIC remains elevated due to minimal capital intensity and pricing power in benchmark products. S&P Global’s ability to monetize proprietary data and analytics supports consistent returns, with operating cash flow covering debt obligations and funding growth initiatives.

Balance Sheet And Financial Health

S&P Global maintains a solid balance sheet with $1.67 billion in cash and equivalents against total debt of $11.93 billion. The debt level is manageable given strong cash flows and EBITDA coverage. Liquidity is further supported by undrawn credit facilities, providing flexibility for strategic investments or M&A. The company’s investment-grade credit rating reinforces its financial stability.

Growth Trends And Dividend Policy

Organic growth is driven by demand for ESG analytics, private market data, and regulatory solutions, complemented by strategic acquisitions like IHS Markit. The dividend payout ratio is sustainable at ~30% of net income, with a $3.69 annual dividend per share. Share repurchases and disciplined capital allocation underscore a balanced approach to returning cash to shareholders while reinvesting in high-ROIC opportunities.

Valuation And Market Expectations

At a $156 billion market cap, S&P Global trades at a premium valuation, reflecting its market leadership, recurring revenue base, and growth prospects. The beta of 1.23 suggests moderate sensitivity to market cycles. Investors likely price in continued margin expansion and mid-single-digit revenue growth, supported by secular trends in data digitization and risk management.

Strategic Advantages And Outlook

S&P Global’s competitive moats include brand authority, regulatory licenses, and high switching costs for its benchmarks and ratings. Integration of IHS Markit enhances cross-selling opportunities, while AI-driven analytics could further differentiate its offerings. Risks include regulatory scrutiny and competition from alternative data providers, but the company’s diversified portfolio positions it well for long-term resilience.

Sources

Company filings, Bloomberg