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We came across a bullish thesis on S&P Global Inc. (SPGI) on Substack by Business Model Mastery. In this article, we will summarize the bulls’ thesis on SPGI. S&P Global Inc. (SPGI)'s share was trading at $542.70 as of Feb 19th. SPGI’s trailing and forward P/E were 43.94 and 31.55 respectively according to Yahoo Finance.
A bustling trading floor with traders watching the market indices intently.
S&P Global stands as a dominant force in the financial data, analytics, and credit ratings industry, leveraging a diversified business model to maintain resilience across market cycles. In 2023, the company reported $13.6 billion in revenue, distributed across five major segments: Market Intelligence ($5.51 billion, 45%), Ratings ($4.41 billion, 36%), Indices ($1.39 billion), Commodity Insights ($1.25 billion), and Mobility ($1.05 billion). This diverse revenue structure differentiates S&P Global from competitors, reducing its reliance on any single market segment.
The company's revenue model is largely subscription-based, with over 75% of its income derived from recurring sources. This provides stability even during periods of market volatility, particularly in the debt issuance sector, where S&P Global's credit ratings business plays a critical role. The Market Intelligence division, offering financial analytics and data, alongside Indices and Commodity Insights, further enhances revenue consistency.
Geographically, S&P Global maintains a strong international presence. In 2023, 60% of its revenue was generated in the United States, with Europe, the Middle East, and Africa (EMEA) contributing 25%, Asia-Pacific 10%, and Latin America 5%. This global footprint allows the company to capitalize on expanding capital markets worldwide, while its Commodity Insights and Indices businesses benefit from global trade and investment trends.
S&P Global also demonstrates strong profitability, with an operating margin of 43.8% and a net margin of 29.1% in 2023. The company’s robust free cash flow generation, totaling $4.23 billion, enables strategic reinvestment in high-growth areas such as ESG ratings, climate analytics, and automotive intelligence. This financial strength is further bolstered by successful acquisitions, including the integration of IHS Markit, which expanded its data and analytics capabilities.
In the credit ratings sector, S&P Global holds a 40% market share, leading the industry ahead of its closest competitor, Moody’s, at 34%. Its dominance in the index business is even more pronounced, powering over 60% of global ETF assets. This entrenched position provides a stable, high-margin revenue stream and further strengthens its competitive advantage.