S&P Global Earnings: Revenue Trends in Line but Margins in Quarter and Outlook Show Softness

S&P Global finished 2023 with solid revenue but modestly elevated expenses. Revenue grew 7% to $3.15 billion, a touch above the FactSet consensus estimate of $3.13 billion. Adjusted operating margin of 44.1% in the quarter was down from 47.0% in the third quarter and missed our estimate of 46.9%. Interestingly, the margin miss relative to our model in the quarter was broad-based with margins in each segment coming in lower than our forecast. As a result of lower margins, adjusted EPS of $3.13 missed the consensus estimate of $3.15 even as the firm’s tax rate declined 120 basis points from the year-ago period. The firm’s 2024 revenue outlook was in line with our expectations, but margins and EPS were light. With shares trading at a healthy valuation prior to the company reporting, the stock is taking a breather given these results and outlook. Overall, we will maintain our wide moat rating and $395 fair value estimate on S&P Global’s shares.