S&P Global stock holds firm as index and ratings giant rides double digit profit growth

S&P Global stock is underpinned by a business that delivered higher earnings in 2023 and entered 2024 with guidance based on growing demand for credit ratings, indices, and financial data across global markets. According to the companys 2023 annual report, S&P Global generated roughly $12.5 billion in revenue in 2023, with adjusted diluted earnings per share around $12.60 for the year, and management guided for further earnings growth in 2024 based on integration of the IHS Markit acquisition and continued expansion in index and data subscriptions.

Revenue above $12 billion and earnings growth

In its 2023 reporting, S&P Global indicated that full year revenue was approximately $12.5 billion, reflecting its position as a diversified provider of credit ratings, benchmarks, and analytics. Compared with 2022, this represented a mid single digit percentage increase, helped by growth in index-linked revenue and data subscriptions even as global debt issuance remained uneven over the period.

The company also reported adjusted diluted earnings per share of around $12.60 in 2023, an increase versus roughly $11.20 in 2022, which corresponds to earnings growth of about 12% year over year. Management highlighted that cost synergies from the merger with IHS Markit, along with efficiency measures across business lines, were key contributors to this improvement in profitability.

Earnings per share up about 12 percent year on year

The roughly 12% rise in adjusted diluted earnings per share from about $11.20 in 2022 to around $12.60 in 2023 illustrates the earnings leverage in S&P Global's model. A large portion of its revenue base comes from recurring subscription and asset linked fees in indices and data, so incremental revenue growth can translate into faster earnings growth as fixed costs are spread over a larger base.

In addition, the company has been active in returning capital to shareholders. In 2023, S&P Global distributed several billion dollars through dividends and share repurchases, while maintaining an investment grade balance sheet. The regular dividend has been increased over time, and free cash flow generation has supported both shareholder distributions and ongoing investment in analytical capabilities and technology.

S&P Dow Jones Indices anchors recurring revenue

A major contributor to the companys resilience is its indices segment, where S&P Dow Jones Indices licenses benchmarks such as the S&P 500 to asset managers and structured product providers. Assets linked to these indices support fee based revenue that tends to fluctuate with global equity market levels rather than with transaction volumes alone.

As assets in index funds and exchange traded funds have expanded over the past decade, the indices business has become an important source of recurring, relatively high margin revenue. For retail investors looking at S&P Global stock, the combination of ratings, indices, and data creates a diversified earnings base that does not rely solely on new bond issuance or a single end market.

Ratings and data businesses leverage global credit cycles

The ratings segment, which assigns credit ratings to sovereigns, corporations, and structured finance transactions, remains sensitive to global debt issuance volumes and refinancing cycles. When issuance improves, revenue from new ratings can rise, while surveillance fees provide a base even in slower issuance periods.

Meanwhile, the market intelligence and commodity insights businesses provide data, research, and analytics on corporate fundamentals, private markets, and energy and commodity flows. These units benefit from long term structural trends such as increased regulation, the growth of passive investing, and demand for high quality data in risk management, portfolio construction, and sustainability analysis.

Representative product S&P 500 index

A flagship product for S&P Global is the S&P 500 index, which is widely used as a benchmark for large cap US equities and underpins a broad range of index funds and derivatives. Fees linked to the S&P 500 support the indices segment and help smooth revenue through market cycles, as assets tracking the index have grown substantially over time and remain a core component of many investment portfolios worldwide.

S&P Global stock and market valuation context

On major US exchanges, S&P Global stock trades under the ticker SPGI and is part of large capitalization benchmarks, reflecting its role as a key financial infrastructure provider. The companys equity valuation factors in its track record of growing adjusted diluted earnings per share from about $11.20 in 2022 to roughly $12.60 in 2023 and its ability to generate strong free cash flow while investing in technology, data coverage, and product development.