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IHS Markit (INFO) Up on Recurring Revenue Strength, Costs High
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IHS Markit Ltd.’s shares have had an impressive run on the bourses over the past year. The stock gained 48.5%, outperforming the 18.2% growth of the industry it belongs to and 32% rise of the Zacks S&P 500 composite.
The company recently reported third-quarter fiscal 2021 adjusted earnings per share of 85 cents that beat the consensus mark by 2.4% and increased 10% on a year-over-year basis. Total revenues came in at $1.18 billion, surpassing the consensus mark by 1.1% and increasing 10.3% from the year-ago quarter on a reported basis and 9% organically.
The company has a well-diversified global customer base and strong brand recognition. Depth and breadth of information and analytics is one of its key competitive differentiators.
IHS Markit’s business model ensures solid recurring revenue generation capacity. Its products and services are offered primarily through recurring fixed and variable fee agreements, which realize stable revenues and cash flows. In the last-reported quarter, recurring fixed revenues of $860 million were up 8% year over year on a reported basis and 7% organically. Recurring variable revenues of $170 million grew 11% year over year on a reported basis and 8% on an organic basis.
IHS Markit is seeing escalation in its costs, a major portion of which is related to acquisition. The company has incurred $70.8 million in acquisition-related costs in the first nine months of fiscal 2021. The company incurred $45.3 million in acquisition-related costs in fiscal 2020, $70.3 million in fiscal 2019 and $135 million in fiscal 2018.
IHS Markit is awaiting its merger with S&P Global (SPGI - Free Report) , a move that is expected to significantly benefit the combined company in terms of scale and business mix, technology and innovation, and customer and talent acquisition. It is anticipated to be accretive to earnings by the end of the second-year post-closing, generate 76% recurring revenues and realize 6.5% to 8% annual organic revenue growth in 2022 and 2023. The deal is expected to be completed in the fourth quarter of 2021.
Zacks Rank and Other Stocks to Consider
IHS Markit currently carries a Zacks Rank #2 (Buy).
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IHS Markit (INFO) Up on Recurring Revenue Strength, Costs High
IHS Markit Ltd.’s shares have had an impressive run on the bourses over the past year. The stock gained 48.5%, outperforming the 18.2% growth of the industry it belongs to and 32% rise of the Zacks S&P 500 composite.
The company recently reported third-quarter fiscal 2021 adjusted earnings per share of 85 cents that beat the consensus mark by 2.4% and increased 10% on a year-over-year basis. Total revenues came in at $1.18 billion, surpassing the consensus mark by 1.1% and increasing 10.3% from the year-ago quarter on a reported basis and 9% organically.
IHS Markit Ltd. Price and Consensus
IHS Markit Ltd. price-consensus-chart | IHS Markit Ltd. Quote
How is IHS Markit Doing?
The company has a well-diversified global customer base and strong brand recognition. Depth and breadth of information and analytics is one of its key competitive differentiators.
IHS Markit’s business model ensures solid recurring revenue generation capacity. Its products and services are offered primarily through recurring fixed and variable fee agreements, which realize stable revenues and cash flows. In the last-reported quarter, recurring fixed revenues of $860 million were up 8% year over year on a reported basis and 7% organically. Recurring variable revenues of $170 million grew 11% year over year on a reported basis and 8% on an organic basis.
IHS Markit is seeing escalation in its costs, a major portion of which is related to acquisition. The company has incurred $70.8 million in acquisition-related costs in the first nine months of fiscal 2021. The company incurred $45.3 million in acquisition-related costs in fiscal 2020, $70.3 million in fiscal 2019 and $135 million in fiscal 2018.
IHS Markit is awaiting its merger with S&P Global (SPGI - Free Report) , a move that is expected to significantly benefit the combined company in terms of scale and business mix, technology and innovation, and customer and talent acquisition. It is anticipated to be accretive to earnings by the end of the second-year post-closing, generate 76% recurring revenues and realize 6.5% to 8% annual organic revenue growth in 2022 and 2023. The deal is expected to be completed in the fourth quarter of 2021.
Zacks Rank and Other Stocks to Consider
IHS Markit currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup Inc. (MAN - Free Report) and Genpact Limited (G - Free Report) , each carrying a Zacks Rank #2 as well. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup and Genpact is pegged at 24.2%and 14.7%, respectively.