Somewhat uncomfortably, on Tuesday the performance of S&P Global (NYSE: SPGI) stock was far worse than that of its most popular offering, the S&P 500 index. The company’s shares lost nearly 10% of their value that day, due to an earnings report that didn’t meet expectations. Meanwhile, the index dipped marginally, falling by 0.3%.
S&P Global’s fourth quarter saw the financial data and information company earn almost $3.92 billion in revenue, which bettered the year-ago figure by 9%. Net income not in accordance with generally accepted accounting principles (GAAP) saw a more robust gain of 12% to hit nearly $1.3 billion, or $4.30 per share.
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That meant a mixed quarter for S&P Global. While it edged past the average analyst revenue estimate of $3.9 billion, it fell just short of the $4.32-per-share consensus for non-GAAP (adjusted) profitability.
All of the company’s revenue streams increased during the quarter. Two standouts were its indices business, which advanced by 14% to produce $498 million, and its ratings service, up 12% to almost $1.19 billion.
In its earnings release, S&P Global also proffered revenue guidance for the entirety of this year. It’s modeling organic constant currency revenue growth of 6% to 8% over the 2024 tally, and GAAP earnings per share of $19.40 to $19.65. However, the consensus analyst projection for the latter is $19.96; the discrepancy was likely a key factor in Tuesday’s sell-off.
To me, that’s an overreaction on the part of investors. S&P Global’s numbers weren’t spectacular, but the company is still posting high-margin net income on a business that continues to grow from those multiple revenue streams. I wouldn’t be so discouraged, in fact I still think the stock is a buy candidate.
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