Updated Aug 7 at 11:25am ET.
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The US economy unexpectedly lost 23,000 jobs in July, a sharp shift from the growth analysts expected. When the job market weakens, it often signals a slowing economy, which usually pushes the Federal Reserve to lower interest rates to encourage borrowing and spending.
For S&P Global, this is a double-edged sword. Lower interest rates can make it cheaper for companies to borrow, which might increase the number of new bonds being issued. However, if the economy is slowing down significantly, companies may pull back on expansion and borrow less overall. Since S&P Global earns a fee every time it grades a new bond, any major shift in how much debt corporations issue directly impacts its most profitable business.
Source: Bloomberg Markets and Finance
The company launched the S&P U.S. CLO Investment Grade Indices to provide a benchmark for collateralized loan obligations. These are complex financial products where multiple loans are bundled together and sold as a single investment. This move helps the company maintain its role as a key gatekeeper in credit markets. By providing the standard tools that investors use to measure performance, the company ensures its data remains a necessary part of the professional investing workflow.
Source: PRNewsWire
The company released updated assessments for 11 stablecoins, which are digital currencies designed to stay at a fixed value, usually one dollar. It found that six of the 11 had an adequate or better ability to stay pegged to their target value. While this is a small part of the business today, providing these assessments helps the company establish itself as a trusted authority in the digital asset space. It is applying the same logic it uses for corporate debt ratings to the world of crypto.
Source: PRNewsWire
The company is integrating data from With Intelligence into its main research platform, Capital IQ Pro. This adds more information on private fund performance and investor allocations to its existing tools. Expanding into private markets is a key goal for the company. Since private companies do not have to share as much data as public ones, providing this hard-to-find information makes the company's subscriptions more valuable and harder for customers to cancel.
Source: PRNewsWire
The company reported that revenue rose 10 percent to about 4.15 billion dollars in the second quarter. Profits grew even faster, with net income up 14 percent. These results were driven by high demand for credit ratings and market data as investors looked for guidance during a period of global uncertainty.
This quarter also marked the end of a major transition. The company officially spun off its Mobility division, which includes CARFAX, into a separate public company on July 1. By removing this slower-growing unit, the company can now focus entirely on its core financial data and indexing businesses, which typically earn much higher profit margins.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts have kept a steady stream of positive ratings for S&P Global following its recent quarterly earnings report. Twenty-four of 28 analysts rate the stock a buy, and the average price target suggests a 32% gain from today's price.
The company has a very consistent track record of clearing the bars set by analysts, usually beating profit expectations by a healthy margin every quarter.
| Expectation | |
|---|---|
| EPS | $4.42 |
| Revenue | $3.64B |
