How Much Revenue Growth Will S&P Global See This Year?
S&P Global (NYSE: SPGI) has seen solid revenue growth of late, driven primarily by strong growth in the Ratings segment. We expect the company’s revenue growth rate to accelerate going forward, as we detail below. In this note we discuss our revenue forecasts for for S&P Global’s primary operating segments – Ratings, Market and Commodities Intelligence and Indices. Our interactive dashboard on S&P Global’s revenues for each business segment allows you to modify the assumptions based on your analysis and arrive at your estimates of these numbers.
- Growth in corporate debt issuance, due to strong economic growth, is the key revenue driver for S&P Global’s Ratings segment. Total corporate debt outstanding continues to grow, and this strong growth is likely to drive revenues for the company going forward. Further, the U.S. economy remains strong, with GDP growth expected to remain in the healthy range of 2-3% in the next few years. This is likely to drive financial transactions, increasing the demand for credit ratings. Click on the above image to access our interactive dashboard and change the revenue growth assumptions to arrive at your own revenue estimate for this segment.
- The financial data and analytics market is growing at around 3-4% annually, and as demand for automation and productivity tools increases, revenues for S&P Global’s market intelligence segment are likely to increase. The company is focusing on opportunities outside the U.S., which is likely to drive growth in the longer term. On our interactive dashboard you can change the revenue growth assumptions to arrive at your own revenue estimates for the segment.
- Passive investment growth is one of the key drivers for S&P Global’s Indices segment. Passive investing is continuing to grow with institutional and retail adoption, lower investment fees and a strong network of distribution channels. According to data provided by S&P Global, between 2007 and 2017 the cumulative net new flows into U.S. Equity passive investing were $1.6 trillion, and in the same period $1.3 trillion was taken out of U.S. Equity active investing. This trend is likely to drive revenues of S&P’s Indices segment moving forward. You can access our interactive dashboard and change the revenue growth assumptions to arrive at your own revenue estimate for this segment, and see how your estimates impact the total revenues of the company.
Per our base case estimates, we expect the company’s total revenue in 2018 to increase by 14%, as the Market and Commodities Intelligence segment is likely to see revenue growth in 2018, compared to a decline in 2017. This should drive the growth rate acceleration in the near term.
In the last year, S&P Global’s stock price has registered an approximately 40% increase. Our dashboard series on the company is aimed at providing a step by step approach to users to estimate the company’s valuation and analyze whether another rapid increase in the stock price is likely. The first two dashboards in this series provide some backgrounds and inputs to the valuation dashboard.
This is our second dashboard of the series. For details around S&P Global’s business and industry trends please see S&P Global Dashboard Series: A Snapshot Of S&P Global’s Business.
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