Quality Value Research
Equity Research Boutique
S&P Global's ratings and indices could form an exceptionally profitable, wide-moat standalone business. Without its other units, their implied operating margin would be around 68%, among the market's top five; that makes further spinoffs sensible, though the separation is hypothetical. x.com x.comÂ
S&P Global's two core businesses are growing nicely, and buying back roughly 5% of its shares at this valuation should create value over time. Excluding Mobility, Q2 revenue rose 11% and EPS 26%. Guidance came in a few pennies below consensus, but the report is hard to dislike. x.comÂ
Mobility Global looks like the typical spinoff most holders dump, not a desirable one like Honeywell Aviation. With Carfax about two-thirds of revenue, it is essentially Carfax, which seems unlikely to remain stand-alone; Equifax, TransUnion or others might eventually acquire it. A reply notes much of Carfax's value comes from public data, with dealers and shops reluctant to share proprietary data. No final decision to sell has been made yet. x.com x.comÂ
S&P Global's July 1 spin-off of Mobility Global refocuses it on its high-margin ratings and indices businesses, removing a conglomerate discount. Its ratings duopoly with Moody's and S&P 500 licensing fees collect tolls on capital markets as passive assets grow and AI and energy buildouts drive a debt issuance boom. Per JPMorgan and other banks, LLMs need proprietary data like its Market Intelligence and Platts benchmarks, reversing AI fears. Q1 operating margin rose 100 bps to 51.8%. x.comÂ
S&P Global is undervalued by a lot, trading near 23x earnings and 20x forward versus a historical 30+, especially for a business of its quality. Mastercard may be fairly valued or slightly below, though it is the best business in the world with the least risk. This answers @Greg_GL_87, who argued both still trade near 30x earnings. x.comÂ
S&P Global looks like a strong, fairly low-risk stock likely to beat the market from here, as it trades at 20x forward earnings, among its lowest levels in a decade, despite one of the world's strongest moats. With Moody's it forms one of the best duopolies anywhere, yet it has been lumped into the SaaS selloff. x.comÂ
S&P Global's stock price has recently disconnected from its business fundamentals, the kind of dislocation that makes a stock worth buying. x.comÂ
S&P Global's valuation compression while fundamentals still look good is a gift from the market, because it owns two of the strongest businesses in the world. x.comÂ
S&P Global is a quiet compounder that keeps delivering in the background. Its latest earnings were really strong, with revenue and net income both up double digits while spending stayed low, and margins remain excellent as the business scales efficiently despite continued investment. x.comÂ
Moody's and S&P Global could de-rate from high starting multiples if generalist portfolio managers come to see them as FICO 2.0. Their industry structures differ, but parallels in standards, pricing power and regulatory exposure could build a narrative that their pricing power is tapped out after the FICO case study, compressing multiples further. So far their de-rating has come from macro and AI pressure, not such fears. x.com x.com x.comÂ