S&P Global (SPGI) Q1 Earnings In Line, Revenue Lag Estimates

S&P Global Inc.’s SPGI first-quarter 2019 adjusted earnings per share of $2.11 came in line with the Zacks Consensus Estimate but exceeded the year-ago quarter figure by 11 cents. Revenues of $1.57 billion lagged the consensus mark by $26 million but improved marginally year over year on a reported basis and 1% organically.

So far this year, shares of S&P Global have gained 29.1%, outperforming the 25.4% rise of the industry it belongs to and 16.8% rise of the Zacks S&P 500 composite.

 

Segmental Revenues

Ratings revenues decreased 7% year over year to $696 million.

Non-transaction revenues declined 4% to $365 million owing to foreign exchange rates, lower Rating Evaluation Service activity and CRISIL, which were partially offset by increased inter-segment royalties from Market Intelligence. Transaction revenues declined 10% to $331 million owing to lower bank loan ratings activity.

Market Intelligence revenues were up 10% year over year to $482 million, primarily driven by higher growth in both Credit Risk Solutions and Data Management Solutions and high single-digit growth in Desktop.

Platts revenues increased 5% to $207 million owing to growth in both core subscription business and Global Trading Services.

S&P Dow Jones Indices revenues increased 2% to $217 million driven by gain in asset-linked fees and increase in data & custom subscriptions, partially offset by decline in exchange-traded derivative fees.

Operating Results

Adjusted operating profit increased 1% year over year to $743 million. Adjusted operating profit margin improved 40 basis points (bps) to 47.3%

Segment wise, Ratings adjusted operating profit decreased 11% to $364 million. Adjusted operating profit margin declined 240 bps to 52.3%.

For Market Intelligence, adjusted operating profit increased 27% to $163 million.  Adjusted operating profit margin increased 460 bps to 33.8%.

Platts’ adjusted operating profit increased 4% to $98 million but adjusted operating profit margin decreased 60 basis points to 47.4%.

S&P Dow Jones adjusted operating profit increased 1% to $151 million. Adjusted operating profit margin declined 100 bps to 69.5%.

S&P Global Inc. Price, Consensus and EPS Surprise

 

S&P Global Inc. Price, Consensus and EPS Surprise | S&P Global Inc. Quote

Balance Sheet and Cash Flow

S&P Global exited first-quarter 2019 with cash, cash equivalents, and restricted cash of $1.44 billion compared with $1.96 billion at the end of the prior quarter. Long-term debt of $3.66 billion was flat with the prior quarter.

The company generated $293 million of cash from operating activities in the reported quarter. Free cash flow was $255 million. Capital expenditures came in at $20 million.

Share Repurchases & Dividend Payment

During the first quarter of 2019, the company returned $785 million to shareholders, which includes $141 million in dividends payments, $144 million in share repurchases and the execution of the $500 million accelerated share repurchase (ASR) program.

2019 Guidance

S&P Global reaffirmed its full-year 2019 adjusted EPS guidance in the range of $8.95-$9.15. The current Zacks Consensus Estimate of $9.03 lies within the guided range.

Zacks Rank & Upcoming Releases

Currently, S&P Global carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting first-quarter 2019 reports of key players like FLEETCOR Technologies FLT, Gartner IT and Equifax EFX. While FLEETCOR and Gartner are slated to report on May 7, Equifax is scheduled to release results on May 10.

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