TipRanks Smart Value #70: Top Grade

Shrilekha Pethe on July 9, 2026

Dear Investors,

Welcome to the 70^th edition of the TipRanks Smart Value Newsletter.

This Week’s Top Value Pick: S&P Global (SPGI)

S&P Global (SPGI) is a leading provider of financial information, analytics, credit ratings, benchmarks, and data solutions that help businesses, governments, and investors make informed decisions. Through its portfolio of businesses spanning Ratings, Market Intelligence, Commodity Insights, Mobility, and Indices, the company delivers mission-critical data, research, software, and workflow solutions to customers worldwide. As demand for data-driven insights, private market intelligence, energy transition analytics, and index-based investing continues to grow, S&P Global is well-positioned to expand its recurring revenue base and deliver sustainable, long-term earnings growth.

Beyond Ratings

S&P Global’s history reflects a steady transformation from a traditional credit ratings publisher into one of the world’s leading providers of financial intelligence, data, analytics, benchmarks, and workflow solutions. The company traces its origins to 1860, when Henry Varnum Poor published one of the first financial guides covering the U.S. railroad industry. In 1941, Poor’s Publishing merged with Standard Statistics to form Standard & Poor’s, establishing one of the world’s premier credit rating agencies. The company entered a new phase of expansion in 1966, when it was acquired by McGraw-Hill. This move provided the financial resources to broaden its global data, research, and analytics capabilities.

Over the subsequent decades, management steadily expanded beyond credit ratings through a combination of acquisitions and product development, strengthening the company’s positions in financial data, index licensing, commodities, and market intelligence as global capital markets became increasingly complex. Reflecting this evolution, McGraw-Hill Financial rebranded as S&P Global in 2016.

Targeted acquisitions have become an increasingly important driver of growth. The acquisition of SNL Financial in 2015 significantly expanded the company’s financial data, banking, insurance, and real estate information businesses, laying the foundation for today’s Market Intelligence segment. The purchase of Trucost in 2016 strengthened S&P Global’s environmental, climate, and sustainability analytics capabilities, while the acquisition of Kensho Technologies in 2018 enhanced its artificial intelligence and machine learning capabilities, improving automation and advanced analytics across its platforms.

The defining event in the company’s modern history came in 2022 with an approximately $44 billion all-stock merger with IHS Markit, the largest acquisition in S&P Global’s history. The transaction transformed the company into one of the world’s largest providers of financial information and analytics by significantly expanding its capabilities across private markets, fixed income, commodities, transportation, automotive, and supply chain intelligence. It also reshaped the company’s operating structure, combining legacy businesses with IHS Markit’s operations to create today’s Market Intelligence, Commodity Insights, and Mobility segments. The merger generated substantial cross-selling opportunities, recurring subscription revenue, and cost synergies while reducing S&P Global’s dependence on the more cyclical credit ratings business. To secure regulatory approval, the company divested several overlapping businesses, including CUSIP Global Services, Leveraged Commentary and Data (LCD), and certain commodity pricing and chemicals businesses inherited from IHS Markit.

Following the merger, management shifted its strategy from large-scale acquisitions toward portfolio optimization, integration, and organic growth. Since 2024, S&P Global has streamlined its portfolio by divesting several non-core businesses while concentrating on its highest-growth, highest-margin franchises. In 2025, S&P Global and CME Group sold their jointly owned post-trade services provider, OSTTRA, for approximately $3.1 billion. The company announced the separation of its Mobility business that same year. It subsequently completed the separation of its Mobility business into an independent public company, reflecting management’s decision to sharpen its focus on its core financial information, data, and analytics franchises. During the same period, S&P Global agreed to divest its Enterprise Data Management (EDM) and thinkFolio businesses, with EDM subsequently sold in early 2026.

Although portfolio simplification has become the company’s primary strategic focus, the company has continued to pursue targeted acquisitions that strengthen its core data and analytics franchises. The acquisition of With Intelligence expands its private markets data capabilities, while smaller acquisitions such as Enertel and ORBCOMM’s Marine Satellite AIS data business enhance its energy and maritime analytics offerings.

Diversified Dominance

S&P Global generates revenue by providing credit ratings, financial data, market intelligence, benchmarks, commodity pricing, and analytics that help businesses, governments, financial institutions, and investors make informed decisions. The company operates through five primary segments: Ratings, Market Intelligence, Commodity Insights, Mobility, and Indices. Together, these businesses generate a diversified mix of subscription, transaction-based, asset-linked, and licensing revenue, reducing dependence on individual markets while producing highly recurring cash flows.

The Ratings segment remains one of S&P Global’s largest businesses, accounting for approximately 31% of the company’s total revenue. It earns fees by assigning credit ratings to corporate, sovereign, financial institution, and structured finance debt issuers. Demand for ratings is closely tied to activity in global debt markets, with revenue increasing as companies and governments issue new bonds or refinance existing debt. Although issuance volumes fluctuate with interest rates and capital market conditions, the business benefits from S&P Global’s strong reputation, regulatory recognition, and leading market position, creating significant barriers to entry.

Beyond credit ratings, S&P Global has steadily expanded its portfolio of recurring subscription businesses that provide greater earnings stability across market cycles. Market Intelligence delivers financial data, research, software, and workflow solutions used by investment professionals, corporations, and financial institutions to support investment analysis, risk management, and regulatory compliance. Commodity Insights supplies benchmark pricing, energy market intelligence, and data covering oil, natural gas, power, metals, agriculture, and the global energy transition, while the Mobility segment provides automotive manufacturers, suppliers, dealerships, and governments with vehicle production forecasts, market research, and supply chain intelligence. The Indices business generates recurring licensing and asset-linked fees through widely used benchmarks such as the S&P 500, benefiting from the continued growth of passive investing and exchange-traded funds.

The company’s business model is supported by proprietary data, globally recognized brands, and deeply embedded customer workflows that create high switching costs and long-term client relationships. Following the IHS Markit merger, S&P Global has expanded opportunities to cross-sell products across its customer base while realizing substantial cost synergies. At the same time, continued investments in artificial intelligence, cloud-based data platforms, and workflow automation are enhancing productivity and increasing the value of its products. Combined with a growing base of recurring subscription and licensing revenue, strong operating margins, and relatively low capital requirements, these competitive advantages position S&P Global to generate sustainable earnings growth and robust free cash flow over the long term.

AI-Ready Advantage

Artificial intelligence has become one of S&P Global’s most important long-term growth opportunities, with management expecting it to strengthen customer retention, expand pricing power, increase enterprise-wide spending, and improve operating efficiency. Instead of disrupting the company’s business model, AI is increasing demand for S&P Global’s proprietary data, analytics, and workflow solutions as financial institutions integrate AI into investment research, risk management, and decision-making. Management increasingly views AI as an opportunity to monetize the company’s unique datasets, further positioning the company as a critical provider of trusted data infrastructure for enterprise AI.

Customer adoption already reflects this shift. During the quarter, API call volumes increased fivefold from the previous quarter, while monthly API usage doubled between February and March, indicating that customers are rapidly embedding S&P Global’s machine-readable datasets into AI-driven workflows. Approximately 150 customers now access Market Intelligence and Commodity Insights datasets through third-party AI platforms such as Claude and Microsoft Copilot, while more than 300 customers are either under contract or evaluating Kensho’s large language model (LLM)-ready APIs. The company has also introduced its own AI Plug-in, enabling enterprise AI assistants to perform licensed financial and analytical tasks using S&P Global’s proprietary content.

Management believes AI is already improving customer economics. Within Market Intelligence, customers using AI-enabled products exhibit retention rates several hundred basis points higher than the broader customer base and generate approximately 30% faster annual contract value (ACV) growth. In Commodity Insights, AI-enabled customers deliver retention rates more than 500 basis points higher and roughly double the ACV growth of traditional customers. Management also highlighted customers accepting renewal price increases of roughly 35% to 45% after expanding subscriptions to include AI capabilities, suggesting that customers increasingly view AI-ready financial data as a productivity-enhancing investment rather than an incremental technology expense.

The company intends to capture value through broader enterprise relationships instead of charging separately for API usage or AI interactions. Whether customers access its content through desktop applications, APIs, AI plug-ins, Model Context Protocol (MCP) connectors, or AI-native workflows, pricing will increasingly reflect the overall business value delivered across the organization. Management believes this approach creates greater long-term monetization opportunities as customers embed the company’s data more deeply into enterprise AI initiatives.

AI is also expected to improve profitability. Management believes the largest productivity gains will emerge during 2027 and 2028 as increasingly capable AI models become embedded across Ratings, Market Intelligence, research, and enterprise data operations. By automating repetitive research, documentation, data processing, and workflow tasks, AI should enable revenue to grow faster than headcount, creating additional operating leverage and supporting long-term margin expansion.

Beyond AI, management is reshaping S&P Global into a more integrated enterprise platform. The company is encouraging customers to adopt a broader portfolio of data, analytics, benchmarks, ratings, and workflow solutions instead of purchasing standalone products through separate business units. The objective is to deepen customer relationships, increase cross-selling, improve retention, expand enterprise-wide contracts, and strengthen pricing power.

Supporting this strategy is the Chief Client Office, which centralizes relationships with the company’s largest customers across Ratings, Market Intelligence, Commodity Insights, and Indices. Management noted that this enterprise-selling approach is already being applied to approximately 150 of the company’s largest customers. Customer engagement has also expanded beyond portfolio managers and research teams to include chief technology officers, chief data officers, AI leaders, and data science teams responsible for enterprise AI strategies, allowing S&P Global to become more deeply embedded in customers’ long-term technology roadmaps.

Management believes this reflects a broader trend toward vendor consolidation as financial institutions increasingly favor integrated platforms over multiple specialized vendors. Market Intelligence sits at the center of this strategy. Although many investors associate the segment primarily with the Capital IQ desktop platform, Capital IQ represents less than 6% of S&P Global’s total revenue and an even smaller share of operating profit. Instead, Market Intelligence is evolving into a broader enterprise platform built around proprietary data, AI-enabled applications, Enterprise Solutions, and workflow capabilities. The company has simplified its sales organization by reducing more than 60 incentive plans to approximately 10, encouraging broader customer relationships and larger enterprise contracts.

Meanwhile, Enterprise Solutions continues to deliver double-digit organic growth through machine-readable data feeds, APIs, valuation services, and workflow tools that become deeply integrated into customers’ technology infrastructure, creating highly recurring revenue, high switching costs, and a larger long-term growth opportunity as demand for enterprise-wide data integration and AI-ready content continues to expand.

Alternative Advantage

Private markets have emerged as another major strategic priority as institutional investors continue allocating capital to private equity, private credit, infrastructure, venture capital, and other alternative assets. Management believes this structural shift is significantly expanding demand for trusted data, benchmarks, analytics, and risk management tools while increasing S&P Global’s addressable market.

To strengthen its position, the company is investing through acquisitions, AI innovation, and product development. The acquisition of With Intelligence expands the company’s proprietary data on private funds, institutional investors, fundraising activity, and investment managers while adding workflow tools that support investment sourcing, due diligence, portfolio monitoring, and fundraising. At the same time, the company continues enhancing its iLEVEL platform with AI capabilities that automate data collection, improve reporting, strengthen portfolio analytics, and reduce manual workflows for private market investors.

Management is also extending one of the company’s greatest competitive strengths – benchmarking –into private markets by developing private equity benchmarks and indices that bring greater transparency and standardized performance measurement to alternative assets. Strategic partnerships with Cambridge Associates and Mercer broaden the distribution of these capabilities among institutional investors, while the rapid expansion of private credit continues to increase demand for independent credit assessments. During the most recent year, private credit ratings revenue grew approximately 25%, and private markets generated more than $600 million in enterprise revenue. By combining proprietary data, benchmarks, ratings, analytics, workflow solutions, and AI-enabled capabilities into a single ecosystem, management believes S&P Global is building one of the industry’s most comprehensive private markets platforms and creating a meaningful long-term contributor to organic growth.

The Ratings segment remains another important long-term growth engine, supported by structural trends that extend beyond normal credit cycles. Although debt issuance fluctuates with interest rates and market conditions, management expects demand for independent credit ratings to continue expanding as global debt markets grow in size and complexity. One emerging catalyst is the rapid buildout of AI infrastructure, with the world’s largest technology companies investing heavily in data centers, semiconductor manufacturing, networking equipment, and power infrastructure. Financing projects of this scale typically requires access to the investment-grade bond market, contributing to a 14% increase in billed issuance during the first quarter, driven by strong issuance from hyperscale technology companies and continued merger and acquisition activity.

Despite the strong quarter, management maintained its full-year Ratings outlook, noting that some issuance was likely pulled forward as companies took advantage of favorable financing conditions. Beyond near-term fluctuations, management sees a larger multi-year opportunity from the refinancing cycle. Record amounts of debt issued during 2020 and 2021 will mature over the next several years, particularly during 2027 and 2028, and many issuers are expected to refinance these obligations, creating sustained demand for updated credit ratings. Together with the continued expansion of private credit markets and S&P Global’s deeply embedded role in investment mandates, financing decisions, and regulatory frameworks, these structural trends support durable long-term growth.

Management is reinforcing these growth opportunities through disciplined portfolio optimization. The company is concentrating capital on businesses built around proprietary data, benchmark franchises, analytics, and AI-enabled workflows while exiting operations with lower strategic differentiation A clear example is the sale of the Energy software business to SLB. Although the software generated meaningful revenue, management concluded that the company’s greatest long-term value resides in its proprietary upstream energy datasets. Following the transaction, S&P Global retained databases covering approximately 80,000 oil and gas wells, including geological, production, valuation, and benchmarking information that form the foundation of CERA Titan, an AI-native platform expected to launch more broadly in 2026.

The company also completed the divestitures of EDM and thinkFolio, strengthened its private markets capabilities through the acquisition of With Intelligence, and completed the separation of the Mobility business to sharpen its focus on Ratings, Market Intelligence, Commodity Insights, and Indices. Management believes this disciplined capital allocation strategy will strengthen competitive positioning, improve margins and free cash flow, and accelerate long-term organic earnings growth.

Supporting all of these initiatives are S&P Global’s benchmark franchises, which remain the foundation of its financial strength. Ratings, Indices, and Platts commodity pricing generate approximately 66% of total revenue and nearly 75% of operating profit, providing highly recurring cash flows that fund investments in AI, enterprise data, and private markets while supporting shareholder returns. These businesses benefit from proprietary benchmarks that are deeply embedded in global financial markets, creating high switching costs, durable customer relationships, recurring revenue, and meaningful pricing power. The Indices business illustrates the strength of this model through S&P Dow Jones Indices, whose benchmarks, including the S&P 500, underpin trillions of dollars invested through passive investment products.

Continued growth in passive investing, digital wealth platforms, exchange-traded derivatives, and demand for custom indices has enabled the business to consistently deliver double-digit revenue growth while maintaining operating margins approaching the mid-70% range. Similar economics underpin the Ratings and Platts franchises, reinforcing S&P Global’s ability to generate resilient cash flows across market cycles and providing sufficient financial flexibility to invest in future growth while preserving one of its most durable competitive advantages.

Margin Momentum

S&P Global has delivered consistent long-term growth by combining strategic acquisitions with favorable industry trends and disciplined capital allocation. Over the past five years, revenue and adjusted EPS have grown at compound annual rates of 13.6% and 4.8%, respectively. The transformative IHS Markit merger significantly expanded the company’s scale and capabilities, while favorable trends in debt issuance, passive investing, and recurring subscription revenue from its data and analytics businesses have supported steady top-line growth. At the same time, merger synergies, portfolio simplification, AI-driven productivity improvements, and ongoing share repurchases have strengthened profitability and enhanced per-share earnings.

That momentum continued during the latest quarter as S&P Global delivered broad-based growth across its benchmark, data, and analytics franchises. Revenue increased 10% year-over-year to $4.2 billion, or 9% organically on a constant-currency basis, exceeding market expectations. Recurring subscription revenue rose 6%, while disciplined cost management lifted the adjusted operating margin by 100 basis points to 51.8%. Excluding one-time transaction-related compensation costs, margin expansion would have reached 160 basis points. Adjusted diluted EPS increased 14% to $4.97, also surpassing Wall Street estimates.

The Ratings segment remained the company’s largest growth driver. Revenue increased 13% to $1.3 billion, while the adjusted operating margin expanded 160 basis points to 67.8%. Transactional revenue rose 15%, supported by strong investment-grade debt issuance as hyperscale technology companies raised capital to finance AI infrastructure, alongside healthy merger and acquisition activity. Non-transactional revenue grew 11%, benefiting from annual fee increases and contributions from CRISIL.

The Indices business continued to demonstrate the strength of its high-margin, asset-light model. Revenue climbed 17% to $519 million, while the operating margin improved to 73.8%. Growth was broad-based, with asset-linked fees increasing 18% on higher assets under management and stronger equity markets, exchange-traded derivatives revenue rising 18%, and Data & Custom Subscriptions growing 12%, marking the third consecutive quarter of double-digit growth.

Market Intelligence generated revenue growth of 8% to $1.3 billion, or 6% organically, while the adjusted operating margin expanded 80 basis points to 33.6%. The acquisition of With Intelligence contributed approximately six percentage points to reported revenue growth, while Enterprise Solutions remained a standout performer, delivering 14% organic growth as customers increased spending on enterprise data, APIs, and workflow solutions.

The Commodity Insights segment also delivered solid results despite geopolitical headwinds. Revenue increased 7%, while the adjusted operating margin expanded 120 basis points to 49.3%. Strong demand for CERAWeek events and Global Trading Services offset weaker subscription revenue, which was affected by disruptions in energy markets following the Iran conflict. Within the segment, Upstream Data & Insights revenue declined 5% as softer market conditions and ongoing portfolio repositioning weighed on performance.

Despite ongoing macroeconomic uncertainty, management largely reaffirmed its full-year outlook, reflecting confidence in the resilience of the company’s diversified business model. The company continues to expect enterprise organic revenue growth of 6% to 8% and adjusted operating margin expansion of 50 to 75 basis points. The only meaningful revision was a reduction in the Commodity Insights organic revenue growth outlook to 4.5% to 6%, down from 5.5% to 7%, reflecting these temporary supply-and-demand disruptions.

As part of the separation, the new Mobility company is expected to issue approximately $2 billion of investment-grade debt, with most of the proceeds paid to S&P Global as a one-time dividend before the transaction closes. Management intends to use a substantial portion of these proceeds for share repurchases and balance sheet management instead of pursuing another large acquisition, reinforcing its disciplined capital allocation strategy while allowing shareholders to benefit directly from the transaction.

Scoring Power

S&P Global’s shares have declined roughly 11% over the past year and about 30% from their 2025 peak, despite the company’s underlying business remaining fundamentally strong. The sell-off was triggered by weaker-than-expected 2026 guidance. The valuation reset was further amplified by concerns that artificial intelligence could disrupt parts of its data business, uncertainty surrounding the Mobility spin-off, and broader weakness across financial information and analytics stocks. However, S&P Global has continued to deliver solid operating performance, including better-than-expected first-quarter 2026 results, while the successful completion of the Mobility spin-off has removed a major overhang. Consequently, many analysts view the recent weakness as a valuation correction, not a deterioration in the company’s long-term fundamentals.

The pullback has also made the stock more attractively valued. SPGI is currently trading at a discount to its historical averages based on non-GAAP trailing and forward P/E ratios and forward EV/EBITDA. Compared to its peers like Moody’s Corp., MSCI, Nasdaq, and Intercontinental Exchange, SPGI trades in the moderate valuation range based on non-GAAP trailing P/E ratio, forward EV/EBITDA, and forward free cash flow yield. While the stock trades at 23.4x non-GAAP forward P/E, a premium to the broader market, it remains significantly cheaper than peers such as Moody’s (29.3x) and MSCI (30.6x), despite offering comparable competitive advantages, recurring revenue streams, and long-term growth prospects. The company continues to expand revenue, earnings, and free cash flow while maintaining industry-leading profitability, supported by its pricing power, scalable business model, and diversified mix of recurring subscription revenue, index licensing, credit ratings, and market intelligence services. This combination provides greater earnings stability and cash flow visibility than businesses that rely more heavily on trading volumes or transaction activity.

These qualities underpin Wall Street’s bullish outlook. Analysts continue to view S&P Global as a high-quality compounder capable of generating consistently high margins and strong free cash flow while investing for future growth. Consensus price targets imply roughly 18% upside from current levels, with the most bullish estimates suggesting around 26% upside, while discounted cash flow analysis indicates the shares may be trading at an approximately 16% discount to intrinsic value.

S&P Global also has one of the strongest capital return records in the market. The company has paid dividends continuously since 1937 and is one of less than 30 S&P 500 Dividend Kings that have increased their dividend annually for more than 50 consecutive years. Over the past decade, the dividend has grown at a CAGR of approximately 11%, while the company has maintained a conservative adjusted earnings payout ratio of roughly 22%, leaving ample room for continued dividend growth. For the most recent quarter, S&P Global declared a quarterly dividend of $0.97 per share, payable on September 10, 2026, to shareholders of record as of August 26, 2026. This represents an annualized dividend of $3.88 per share.

Management’s confidence in the company’s long-term cash-generating ability is also evident in its capital allocation strategy. Following the completion of the Mobility spin-off, S&P Global now expects to return at least 100% of adjusted free cash flow to shareholders, primarily through share repurchases while continuing to pay its regular dividend. This represents a meaningful increase from its previous target of returning approximately 85% of adjusted free cash flow, reflecting management’s confidence in the durability of the business and its future cash flow generation.

Share repurchases remain another important pillar of this strategy. During the most recent quarter, the company returned excess cash to shareholders by repurchasing $1 billion of its shares while continuing to pay its regular dividend. In November 2025, the board authorized a new program to repurchase up to 30 million shares, representing roughly 10% of shares outstanding at the time, replacing the fully utilized 2022 authorization. As of March 31, 2026, approximately $13 billion remained available under the authorization, giving management significant flexibility to repurchase shares when valuations are attractive.

Management has indicated that it believes the market continues to undervalue S&P Global’s long-term earnings power, citing the strength of its benchmark franchises, expanding AI capabilities, growing private markets platform, and durable free cash flow generation. Reflecting that conviction, executives have stated that repurchasing the company’s own shares currently offers a more compelling use of capital than most acquisition opportunities, reinforcing confidence in the intrinsic value of the business and its long-term growth prospects.

Investing Takeaway

S&P Global may not qualify as a traditional value stock, but the recent pullback has made its shares considerably more attractive for long-term investors. The business continues to generate highly recurring revenue, industry-leading profitability, and strong free cash flow, supported by dominant positions in credit ratings, financial data, benchmarks, and analytics. Management is sharpening the portfolio around its highest-quality franchises while expanding into artificial intelligence and private markets, reinforcing the company’s long-term growth outlook. Despite these strengths, the stock now trades below its historical valuation and at a discount to several of its closest high-quality peers. Combined with disciplined capital allocation, substantial share repurchases, and a long record of returning cash to shareholders, the current valuation offers investors an opportunity to buy a best-in-class financial information company at a more reasonable price than has been available in recent years.

Category: Smart Value