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S&P Global (SPGI) Up 4.4% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for S&P Global Inc. (SPGI - Free Report) . Shares have added about 4.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
S&P Global Q4 Earnings & Revenues Beat, Offers View
S&P Global reported fourth-quarter 2016 adjusted income of $334 million or $1.28 per share compared with $304 million or $1.12 per share in the year-earlier quarter. The adjusted earnings for the reported quarter comfortably beat the Zacks Consensus Estimate of $1.20.
Revenues for the quarter were $1,399 million compared with $1,374 million in the year-ago quarter. Quarterly revenues beat the Zacks Consensus Estimate of $1,326 million. Top-line growth was primarily supported by successful productivity efforts, partially offset by higher taxes.
GAAP income for the quarter was $537 million or $2.05 per share compared with $248 million or $0.91 in the year-ago quarter.
For full-year 2016, the company’s GAAP income was $2,106 million or $7.94 per share. Revenues increased 7% year over year in 2016 to $5,661 million.
Segmental Details
S&P Global Ratings segment’s revenues increased 14% year over year to $658 million, chiefly driven by increase in transaction revenues. Operating profit jumped 11% to $258 million from the prior-year quarter. Operating profit margin decreased 100 basis points to 39% in the quarter.
S&P Global Market and Commodities Intelligence revenues declined 11% year over year to $595 million, due to the sale of J.D. Power, the SPSE/CMA pricing businesses, and Equity and Fund Research. The segment’s operating profit was up significantly to $530 million, while operating margin improved 6,790 basis points to 89%, primarily driven by gains from divestitures.
S&P Dow Jones Indices revenues rose 13% to $171 million in the reported quarter. The segment’s operating profit increased 10% to $104 million.
Financial Aspects
S&P Global ended the year with cash and equivalents of $2,392 million compared with $1,481 million in 2015. Long-term debt was $3,564 million at 2016 end compared with $3,468 million in the year-ago period. The company generated free cash flow from continuing operations of $1,482 million during the year compared with $1,225 million a year ago.
For the full year, the company returned $1.5 billion to shareholders with $1.1 billion in share repurchases and $380 million in dividends. The company has approximately 25.8 million shares remaining under the existing share repurchase program. The company expects to continue its share repurchase program in 2017 as well.
Outlook
The company provided its initial guidance for 2017. It currently expects adjusted EPS (earnings per share) to be $5.90 to $6.15, while GAAP EPS is expected to be in the range of $5.65−$5.90.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.
At this time, S&P Global's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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S&P Global (SPGI) Up 4.4% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for S&P Global Inc. (SPGI - Free Report) . Shares have added about 4.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
S&P Global Q4 Earnings & Revenues Beat, Offers View
S&P Global reported fourth-quarter 2016 adjusted income of $334 million or $1.28 per share compared with $304 million or $1.12 per share in the year-earlier quarter. The adjusted earnings for the reported quarter comfortably beat the Zacks Consensus Estimate of $1.20.
Revenues for the quarter were $1,399 million compared with $1,374 million in the year-ago quarter. Quarterly revenues beat the Zacks Consensus Estimate of $1,326 million. Top-line growth was primarily supported by successful productivity efforts, partially offset by higher taxes.
GAAP income for the quarter was $537 million or $2.05 per share compared with $248 million or $0.91 in the year-ago quarter.
For full-year 2016, the company’s GAAP income was $2,106 million or $7.94 per share. Revenues increased 7% year over year in 2016 to $5,661 million.
Segmental Details
S&P Global Ratings segment’s revenues increased 14% year over year to $658 million, chiefly driven by increase in transaction revenues. Operating profit jumped 11% to $258 million from the prior-year quarter. Operating profit margin decreased 100 basis points to 39% in the quarter.
S&P Global Market and Commodities Intelligence revenues declined 11% year over year to $595 million, due to the sale of J.D. Power, the SPSE/CMA pricing businesses, and Equity and Fund Research. The segment’s operating profit was up significantly to $530 million, while operating margin improved 6,790 basis points to 89%, primarily driven by gains from divestitures.
S&P Dow Jones Indices revenues rose 13% to $171 million in the reported quarter. The segment’s operating profit increased 10% to $104 million.
Financial Aspects
S&P Global ended the year with cash and equivalents of $2,392 million compared with $1,481 million in 2015. Long-term debt was $3,564 million at 2016 end compared with $3,468 million in the year-ago period. The company generated free cash flow from continuing operations of $1,482 million during the year compared with $1,225 million a year ago.
For the full year, the company returned $1.5 billion to shareholders with $1.1 billion in share repurchases and $380 million in dividends. The company has approximately 25.8 million shares remaining under the existing share repurchase program. The company expects to continue its share repurchase program in 2017 as well.
Outlook
The company provided its initial guidance for 2017. It currently expects adjusted EPS (earnings per share) to be $5.90 to $6.15, while GAAP EPS is expected to be in the range of $5.65−$5.90.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.
S&P Global Inc. Price and Consensus
S&P Global Inc. Price and Consensus | S&P Global Inc. Quote
VGM Scores
At this time, S&P Global's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.