Does Recent Financial Sector Volatility Open the Door for Opportunity in S&P Global?

Thinking about whether S&P Global is a buy, hold, or sell right now? You’re not alone, and with good reason! This is a company that tends to stay on investors’ radar through both bull and bear markets. Even if you’ve just glanced at your portfolio lately, you can’t miss that S&P Global’s stock price has had a few twists and turns: it’s dipped by 1.1% over the past week, slid 10.6% over the last month, and remains down 2.9% year-to-date. If you zoom out, you’ll see a much brighter picture, with the stock gaining 67.4% over the past three years and 41.7% in five years. These longer-term results suggest that many investors still back the company despite any short-term jitters.

What’s behind the recent moves? Recent shifts in market sentiment, especially broader financial sector volatility and changing perceptions around risk, seem to have played a part. There hasn’t been a big, game-changing news event. However, the stock is still feeling the ripple effects from ongoing macroeconomic developments and investor caution about market valuations overall.

If you’re wondering about value, here’s a quick sneak peek: based on six common valuation checks, S&P Global scores a 1, meaning it’s currently undervalued in just one category. Does that mean it’s expensive, or is there hidden value the usual checks are missing? Next, we’ll dig into exactly how S&P Global stacks up on these six valuation methods, and share a perspective that matters even more than the numbers at the end.

S&P Global scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: S&P Global Excess Returns Analysis

The Excess Returns model measures a company's ability to generate returns on invested capital above its cost of capital, which is a sign of sustained financial strength. For S&P Global, the analysis uses critical metrics like book value, return on equity, and calculated excess returns based on analyst projections.

According to the data, S&P Global has a Book Value per share of $109.37 and a projected Stable Book Value of $112.39, both derived from the consensus of five analysts. Future expected earnings, or Stable EPS, stand at $18.27 per share. The company’s Cost of Equity is $9.33 per share, so S&P Global is generating an Excess Return of $8.94 per share over that threshold. Its average Return on Equity is a sturdy 16.26%, underscoring strong profitability relative to shareholder investment.

However, when these returns are modeled forward and discounted, the intrinsic value implied by the Excess Returns model is considerably lower than the current market price. This indicates S&P Global is around 69.7% overvalued by this approach.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for S&P Global.

Our Excess Returns analysis suggests S&P Global may be overvalued by 69.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: S&P Global Price vs Earnings

The Price-to-Earnings (PE) ratio is widely considered the go-to metric for valuing profitable companies, because it captures what investors are willing to pay today for a dollar of future earnings. For high-quality businesses like S&P Global, the PE ratio becomes especially useful since it translates continuous profit streams directly into investment value.

What’s considered a reasonable or “fair” PE ratio depends not just on the company’s past results, but also on growth expectations and risk. Higher expected earnings growth and lower risk typically justify a premium multiple. Slower-growth or riskier firms warrant lower ones. S&P Global currently trades at a PE of 36.6x. That is noticeably above the Capital Markets industry average of 25.5x and also above its peer group average at 32.8x. This suggests the market sees it as a premium business.

To refine this further, Simply Wall St’s proprietary “Fair Ratio” takes into account more than just peer and industry comparisons. It considers earnings growth, profit margins, risk profile, industry position, and market cap. For S&P Global, the Fair Ratio estimate is 20.2x, which is substantially lower than its actual PE. This means that, even when factoring in S&P Global’s strengths, the current valuation appears rich.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your S&P Global Narrative

Earlier we mentioned there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your view of a company's story, where you think the business is heading and how its future numbers might play out, connected directly to a financial forecast and a fair value calculation.

By creating a Narrative, you link what you know or believe about S&P Global to an actual dollar estimate, making your perspective quantifiable and actionable. Narratives are easy to use and available free on Simply Wall St’s platform, used by millions of investors, right in the Community page.

This approach helps you make better decisions by letting you easily compare your Fair Value with the current Price, and instantly see whether you think S&P Global is a buy, hold or sell. Best of all, Narratives update dynamically when fresh news or new quarterly results come out, so your analysis always reflects the latest facts.

For S&P Global, one investor’s Narrative might value it at a premium due to continued market leadership, while another could see downside risk and a much lower fair value based on slowing growth, with each perspective reflected in their forecasted numbers and investment decisions.

Do you think there's more to the story for S&P Global? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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