SPGI - Embedded Expectations Analysis - 2021 03 26
S&P Global Inc. (SPGI:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 29.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their non-transaction business revenue, IHS Markit merger, and their service fee collectionSpecifically, management may lack confidence in their ability to achieve net zero gas emissions by 2040, focus on innovation and technology, and meet their non-transaction revenue growth outlook. In addition, they may be overstating the capacity of Kensho Extract to replicate information, the potential of their merger with IHS Markit, and the progress of their growth initiatives. Moreover, they may have concerns about the sustainability of demand for new products in China, the energy transition business from the IHS Markit merger, and the impact of shifts in global issuances. Additionally, they may be overstating the stability of their Ratings Evaluation services business and they may lack confidence in their ability to drive external revenue growth from Kensho. Finally, they might have concerns about increases in adjusted expenses, due to incentive true ups and growth investments, and the sustainability of increased surveillance fees from bond issuances
S&P Global is a provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. The company's segments include: S&P Global Ratings, which provides credit ratings, research and analytics; S&P Global Market Intelligence, which provides multi-asset-class data, research and analytical capabilities that integrate cross-asset analytics and desktop services; S&P Global Platts, which provides information and benchmark prices for the commodity and energy markets; and S&P Dow Jones Indices, which provides a variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.