Assessing S&P Global (SPGI) Valuation As New Data Partnerships And Tech Leadership Push Growth Agenda

S&P Global (SPGI) is in focus after launching new private markets performance analytics datasets with Cambridge Associates and Mercer, alongside naming a new Chief Technology and Transformation Officer to lead its enterprise wide technology agenda.

See our latest analysis for S&P Global.

The recent product launch and leadership change come as the share price trades at US$425.17, with a 7 day share price return of 4.1%. However, the year to date share price return shows a 17.1% decline, while the 3 year total shareholder return of 26.4% and 5 year total shareholder return of 22.7% suggest longer term holders have seen different outcomes to recent price pressure, pointing to momentum that has recently cooled.

If this kind of data and technology theme interests you, it can be worth widening the lens and checking out 66 profitable AI stocks that aren't just burning cash

With the shares down 17.1% year to date but still reflecting a multiyear total return in positive territory, is S&P Global now trading below what its data and technology franchises might justify, or is the market already pricing in future growth?

Most Popular Narrative: 21% Undervalued

Compared with the latest fair value estimate of $538.52, S&P Global trading at $425.17 sits well below where the most followed narrative thinks it should be. That view leans heavily on how its newer products and markets could reshape the earnings mix.

The introduction and rapid growth of energy transition and climate products, almost 30% year-over-year, in response to global focus on energy security and transition, could lead to significant revenue growth opportunities in emerging markets and technologies.

Read the complete narrative.

Curious what kind of earnings profile that level of growth is meant to support? The narrative leans on firm revenue expansion, wider margins and a richer future earnings multiple to reach its fair value.

Result: Fair Value of $538.52 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this view still hinges on issuance remaining supportive and on AI and market data investments translating into earnings rather than putting pressure on margins.

Find out about the key risks to this S&P Global narrative.

Another View: Cash Flows Paint a Tighter Picture

While the consensus narrative suggests S&P Global could be 21% undervalued at $538.52, the SWS DCF model points the other way. On that measure, the current $425.17 price sits above an estimated future cash flow value of $382.42, which raises the question of whether the market is already paying up for the story.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out S&P Global for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 63 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mix of optimism and caution here will mean different things to different investors, so move quickly, review the data and weigh the 4 key rewards.

Looking for more investment ideas?

If you stop with just one company, you could miss other opportunities that better fit your goals, so broaden your watchlist using focused stock ideas from the screener.

• Target steadier candidates by zeroing in on companies flagged in the 65 resilient stocks with low risk scores that may suit a more cautious approach.
• Hunt for potential value by scanning the screener containing 25 high quality undiscovered gems that many investors might be overlooking.
• Aim for reliable income by reviewing companies in the 12 dividend fortresses that offer higher dividend yields.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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