SPGI S&P Global
A toll-road duopoly on global capital markets: excellent business, and the price already reflects most of it.
The story
S&P Global owns some of the best franchises in finance: half of a global credit-ratings duopoly, the S&P 500 and Dow Jones index brands collecting asset-linked fees, Platts commodity benchmarks, and Capital IQ data embedded in client workflows. Regulation, network effects and benchmark lock-in make these moats durable. The firm is a mature compounder. Growth comes from debt issuance cycles, passive AUM growth, private-markets data and pricing power, and the planned Mobility spin-off narrows it toward its highest-margin businesses.
Growth of 7-8% matches the mid-to-high single-digit organic trend plus pricing, below the 11% five-year CAGR that the IHS Markit merger inflated. Margin rises toward 48%, in line with the GAAP 44.6% TTM and roughly 50% adjusted once amortization of intangibles fades. The reported 0.36 sales-to-capital is distorted by merger goodwill, so I use about 1.6 to reflect how little capital organic growth actually needs (capex is only $0.16B). A 12-year horizon fits a regulated duopoly with a long runway.
Value drivers
| Revenue growth (Y1) | 7.5% |
| Terminal growth | 3.5% |
| Forecast horizon | 12y |
| Target operating margin | 48.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.60 |
| Beta | 1.00 |
| Failure probability | 0.5% |
| Cost of capital (WACC) | 9.3% |
| Terminal WACC | 9.3% |
Valuation bridge
| PV of explicit FCFF | 53.83B |
| PV of terminal value | 50.79B |
| Equity value | 87.81B |
| ÷ shares → per share | $297.87 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 17.33B | 7.5% | 45.2% | 6.07B | 755.67M | 5.31B | 4.86B |
| 2 | 18.57B | 7.1% | 45.9% | 6.60B | 772.96M | 5.83B | 4.88B |
| 3 | 19.82B | 6.8% | 46.6% | 7.15B | 785.92M | 6.37B | 4.88B |
| 4 | 21.09B | 6.4% | 47.3% | 7.73B | 794.10M | 6.93B | 4.86B |
| 5 | 22.37B | 6.0% | 48.0% | 8.31B | 797.05M | 7.51B | 4.82B |
| 6 | 23.64B | 5.7% | 48.0% | 8.78B | 794.39M | 7.99B | 4.69B |
| 7 | 24.90B | 5.3% | 48.0% | 9.25B | 785.80M | 8.47B | 4.55B |
| 8 | 26.13B | 5.0% | 48.0% | 9.71B | 771.00M | 8.94B | 4.40B |
| 9 | 27.33B | 4.6% | 48.0% | 10.15B | 749.81M | 9.41B | 4.23B |
| 10 | 28.49B | 4.2% | 48.0% | 10.58B | 722.12M | 9.86B | 4.06B |
| 11 | 29.59B | 3.9% | 48.0% | 10.99B | 687.90M | 10.31B | 3.89B |
| 12 | 30.62B | 3.5% | 48.0% | 11.38B | 647.23M | 10.73B | 3.70B |
Key risks
- A cyclical drop in debt issuance hits ratings revenue, which carries the highest margins
- Generative AI and cheaper data rivals erode pricing in Market Intelligence
- Pressure on index fees from passive-fund price wars, plus regulatory or litigation risk in ratings
Catalysts
- A refinancing wave from the 2026-2028 debt maturity wall
- The Mobility spin-off and buybacks sharpen the focus on high-return businesses