Revenues advanced 9% to $1,439 million, beating the Zacks Consensus Estimate of $1,416 million. Top-line growth was primarily supported by strong performances across S&P G
lobal Ratings and S&P Global Market Intelligence.
Adjusted operating profit margin expanded 320 basis points (bps) to 44.4%.
S&P GLOBAL INC Price, Consensus and EPS Surprise
Segment Details S&P Global Ratings segment revenues increased 9% year over year to $642 million, chiefly driven by increase in transaction revenues. Adjusted operating profit surged 17% to $330 million while adjusted margin expanded 330 bps to 51%. Transaction revenues, which include ratings of publicly issued debt and bank loan as well as corporate credit estimates, jumped 23% year over year to $299 million, mainly owing to an improvement in bond issuance, contract terms, bank loan ratings as well as the U.S. public finance issuance.
However, non-transaction revenues, which include annual contracts, surveillance fees and subscriptions, came in at $343 million, flat year over year. Strength in surveillance fees was overshadowed by decrease in Rating Evaluation Service fees. Region-wise, the segment’s domestic and international revenues were up 9% and 10%, respectively.
S&P Global Market Intelligence reported revenue growth of 21% year over year to $429 million. The segment’s adjusted operating profit soared 43% to $135 million, primarily due to the SNL acquisition as well as progress on integration-related synergies. On the other hand, adjusted operating margin expanded 480 basis points to 31%. S&P Dow Jones Indices revenues rose 6% to $164 million in the reported quarter. The segment’s adjusted operating profit increased 1% to $108 million.
S&P Global Platts segment revenues declined 8% year over year to $229 million, comprising J.D. Power results through Sep 7, 2016. The segment’s adjusted operating profit was down 4% to $94 million. Financial Aspects S&P Global ended the quarter with cash and equivalents of $2,399 million and long-term debt of $3,563 million. The company incurred capital expenditures of $67 million and generated free cash flow from continuing operations of $1,045 million during the first nine months of 2016.
Further, during the third quarter, S&P Global returned $845 million to shareholders, which comprised $750 million under the accelerated share repurchase (ASR) program and $95 million through dividends. Outlook The company expects earnings for 2016 in the band of $5.15–$5.25 per share compared with the previous estimate of 5.05–$5.20. The Zacks Consensus Estimate is currently pegged at $5.22 per share.
Zacks Rank S&P Global currently carries a Zacks Rank #2 (Buy). Some other stocks which warrant a look in the sector include TransUnion TRU, Verisk Analytics, Inc. VRSK and Core-Mark Holding Company, Inc. CORE. All these stocks have the same rank as S&P Global. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
TransUnion has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 10%.Verisk Analytics has an impressive long-term earnings growth rate of 11.8%.Core-Mark Holding delivered positive earnings surprises in the last three quarters and witnessed positive estimate revisions for 2016 over the past 60 days.
Confidential from Zacks Beyond this Analyst Blog, would you like to see Zacks’ best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.