Today we’re going to take a look at the well-established S&P Global Inc (NYSE:SPGI). The company’s stock saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine S&P Global’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for S&P Global
What’s the opportunity in S&P Global?
According to my valuation model, the stock is currently overvalued by about 33%, trading at $177.18 compared to my intrinsic value of $133.47. This means that the opportunity to buy S&P Global at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that S&P Global’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of S&P Global look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by a double-digit 14.11% over the next couple of years, the outlook is positive for S&P Global. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? S&P Global’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe S&P Global should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on S&P Global for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for S&P Global, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.