Should I Buy S&P Global (SPGI)? Finance YouTuber Analysis

The YouTuber identifies S&P Global as a potential long-term buy, noting that its stock has also declined by about 20%. This drop has pushed its forward PE ratio near the low end of its decade-long range, suggesting it might be undervalued. The YouTuber found no significant red flags upon initial review, indicating a deeper dive could reveal a good opportunity.

“When we jump in and look at the fair value, once again, sticking with forward PE ratio, we can see over the past decade it is right near the low end right now. So, this is another one that could be worth a deeper dive to see if it could one, does it fit well into our portfolio?”

The YouTuber suggests S&P Global is undervalued, trading at a forward P/E of 21, well below its historical median of 28.6, despite 10% revenue and EPS growth. He argues the market is incorrectly lumping it with software companies vulnerable to AI disruption, believing SPGI's vast proprietary data and embedded customer workflows make it an AI beneficiary with a wide moat.

“So, in my opinion, again, if S&P Global can prove that it's not actually being disrupted by artificial intelligence, and instead if they can actually turn that into a tailwind and continue growing revenue and earnings per share by 10% per year, then the stock is actually looking pretty dang interesting today.”

The YouTuber is buying S&P Global, identifying it as a key beneficiary of the ETF and index investing megatrend, alongside its highly profitable ratings and market intelligence segments. They note its current undervaluation relative to its 10-year average, stable earnings, and an estimated annual return potential of 18.2% by 2028, making it an attractive long-term investment.

“Ich halte ich halte jetzt beide Aktien für interessant. Äh etwas höhere Diw bei S&P Global äh aber beides im Prinzip ähm sehr aussichtsreich.”

This creator believes S&P Global is attractively valued despite its recent flat performance, trading at a discount when combining its quality and current valuation multiple. He highlights its 13% revenue growth, $5.5 billion in free cash flow, 42% EPS growth year-over-year, and share buybacks reducing share count by 2%. He also sees the spin-off of the lower-margin mobility business as a strategic move that will strengthen the company's focus on its core, higher-margin data and analytics businesses.

“My largest position is S&P Global and the report was great as you would expect. The stock went up after hours. The company is flat year to date on a down year and this is a company that still today right now I believe is attractively valued.”

The YouTuber considers S&P Global a buy, describing it as a predictable 'toll booth' company that profits in any market environment. Despite concerns about interest rates affecting its credit rating business, he argues that companies will still issue debt, and S&P Global's diversified revenue streams, including market intelligence and indices, ensure strong, gradual growth and high profit margins. He notes its valuation is attractive, trading cheaper than the S&P 500 average.

“I believe with minimal downside now the valuation isn't so cheap that it's an absolute still investors aren't in panic mode with this company but the valuation remains in my opinion very attractive”

The YouTuber recommends S&P Global as a 'buy and hold forever' stock, citing its durable and predictable revenue streams, particularly from its global credit ratings business and its ownership of major indices like the S&P 500. These segments provide a 'toll booth' on global debt and a continually growing licensed revenue, making the company highly resistant to disruption despite potential competition in other areas like market intelligence.

“S&P Global has that with their different Revenue lines in particular their rating business and their indices business out of all the lines of business these two forms of Revenue are virtually indestructible.”

Carlson is holding S&P Global, despite a slight post-earnings dip, due to its 'fantastic' earnings report and raised free cash flow guidance for 2024. He highlights strong growth across all business segments, particularly credit ratings, and believes the company trades at a reasonable valuation given its expected free cash flow yield.

“I'm happy with S&P Global and Moody's I'm keeping both of these companies.”

The YouTuber recommends S&P Global, highlighting its diverse operations including indices, mobility data, commodity insights, and debt ratings. As market volatility and uncertainty increase, institutional investors seek more market insights and data, benefiting SPGI. Additionally, weakening financials at companies drive demand for bond ratings, boosting SPGI's ratings revenue. There could be an upside surprise given current growth expectations.

“as volatility and uncertainty in the markets increase the big institutional investors start to get nervous and they look for more Market insights and data and they look for it with sbgi”

The YouTuber sees surprise upside potential in S&P Global despite its low dividend yield, following its merger with IHS Markit. He believes the combined entity, with significant revenue from market intelligence and ratings, will benefit from increased demand for market data and lead to stronger profitability, even though revenue growth has been slower than peers.

“I like what this merger is going to do for the business and besides that boost of Revenue I think it comes through in stronger profitability as well.”

The YouTuber views S&P Global as a long-term hold for financial exposure, praising its merger with IHS Markit which enhances its data and benchmarking tools, especially in supply chain intelligence. He anticipates stronger profitability post-merger, despite slower recent revenue growth. Analysts have a target price of $390, indicating over 22% upside.

“Analysts have an average Target price of 390 a share just over 22 upside from here but this is a long-term hold for a great financials exposure.”