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When I last reviewed S&P Global (SPGI) in my August 1, 2025 Wide Moat S&P Global’s Valuation Is Fair post, shares were trading at ~$546.50. The share price subsequently touched ~$579 on August 14.
I did not expect to revisit SPGI until after its Investor Day on November 13, 2025. The company's share price, however, has recently experienced a significant pullback. This has prompted me to immediately revisit this existing holding.
Dividend and Dividend Yield
The company's dividend history on its website only dates back to 1995. Its track record of consecutive years of dividend increases, however, extends well beyond this.
Despite this impressive dividend track record, the dividend metrics are irrelevant in my investment decision making process. My focus is on an investment's total potential return. I anticipate the majority of SPGI's investment will be in the form of capital gains.
My comments related to share repurchases are the same as in my prior post.
Valuation
Using management's $14.35 - $14.60 GAAP diluted EPS guidance and my September 18 ~$512.96 weighted average purchase price, the forward diluted PE is ~35.4 based on the ~$14.475 mid-point. The forward adjusted diluted PE is ~30 based on the ~$17.125 mid-point of management's $17.00 - $17.25 adjusted diluted EPS guidance.
The forward-adjusted diluted PE levels using my average purchase price and broker estimates are:
- FY2025 - 24 brokers - ~29.8 using a mean of $17.23 and low/high of $17.12 - $17.40.
- FY2026 - 24 brokers - ~26.6 using a mean of $19.26 and low/high of $18.75 - $19.95.
- FY2027 - 18 brokers - ~23.8 using a mean of $21.55 and low/high of $20.77 - $23.05.
As noted in several previous posts, I place almost no reliance on earnings estimates beyond the current fiscal year.
In my August 1, 2025 post, I note that the FYE2024 shares outstanding was 307.8 million. I anticipated the FYE2025 shares outstanding could drop to ~301 million suggesting a ~304.4 million mid-point (~301 - ~307.8 million).
To estimate SPGI's valuation using FCF, divide the average of management's adjusted guidance (~$5.7B) by ~304.4 million shares to arrive at ~$18.73 in FCF/share. Divide the $512.96 weighted average purchase price of my September 18 purchases, and the forward P/FCF is ~27.4.
If we estimate FY2025's SBC will be ~$0.255B (~$0.247B in FY2024), the FY2025 FCF drops to ~$5.445B ($5.7B - ~$0.255B). Divide this by 304.4 million shares and we get ~$17.90 FCF/share. Divide $512.96 by ~$17.90 and the P/FCF is ~28.7.
In my August 1, 2025 post I wrote:
My preference is to gauge a company's valuation based on cash flow. I do, however, also consider GAAP and non-GAAP earnings guidance.
Management's revised GAAP diluted EPS guidance is $14.35 - $14.60 and the current share price is ~$546.50. Using these figures, the forward diluted PE is ~37.8 based on the ~$14.475 mid-point. The forward adjusted diluted PE is ~32 based on the ~$17.125 mid-point of management's $17.00 - $17.25 adjusted diluted EPS guidance.
The forward-adjusted diluted PE levels using the current ~$546.50 share price and broker estimates are:
- FY2025 - 23 brokers - ~31.8 using a mean of $17.16 and low/high of $16.87 - $17.30.
- FY2026 - 23 brokers - ~28.5 using a mean of $19.16 and low/high of $18.58 - $19.80.
- FY2027 - 16 brokers - ~25.5 using a mean of $21.44 and low/high of $20.77 - $22.90.
I do not rely on earnings estimates beyond the current fiscal year because I do not know how anybody can consistently accurately predict how a company is going to perform 2+ years from now.
The FYE2024 shares outstanding was 307.8 million. In my August 1, 2025 post, I noted that the FYE2025 shares outstanding could drop to ~301 million suggesting a ~304.4 million mid-point (~301 - ~307.8 million).
To estimate SPGI's valuation using FCF, divide the average of management's adjusted FCF guidance (~$5.7B) by ~304.4 million shares to arrive at ~$18.73 in FCF/share. Divide the current ~$546.50 share price by ~$18.73 and the forward P/FCF is ~29.2.
If we estimate FY2025's SBC will be ~$0.255B (~$0.247B in FY2024), the FY2025 FCF drops to ~$5.445B ($5.7B - ~$0.255B). Divide this by 304.4 million shares and we get ~$17.90 FCF/share. Divide $546.50 by ~$17.90 and the P/FCF is ~30.5.
For comparison, I calculated SPGI's approximate valuation as follows in my April 30, 2025 post:
Management's revised GAAP diluted EPS guidance is $14.60 - $15.10 and the current share price is ~$492. Using these figures, the forward diluted PE is ~33.1 based on the ~$14.85 mid-point. The forward adjusted diluted PE is ~29 based on the ~$17 mid-point of management's $16.75 - $17.25 adjusted diluted EPS guidance.
The forward-adjusted diluted PE levels using the current share price and broker estimates are:
- FY2025 - 23 brokers - ~29 using a mean of $16.97 and low/high of $16.35 - $17.62.
- FY2026 - 23 brokers - ~25.9 using a mean of $19.03 and low/high of $18.10 - $19.74.
- FY2027 - 13 brokers - ~23.1 using a mean of $21.29 and low/high of $20.05 - $21.85.
Take these earnings estimates with a 'grain of salt'. I don't know how anybody can consistently accurately predict how a company is going to perform 2+ years from now...especially in the current environment.
In FY2025, SPGI expects to return approximately 85% of adjusted free cash flow to shareholders through dividends and share repurchases. SPGI is lowering its adjusted FCF outlook to $5.6B - $5.8B ($5.7B average x 85% = ~$4.845B). The prior guidance is ~$6.0B ($6.0B x 85% = ~$5.1B). This reduction is the result of changes in the assumptions for the timing of cash taxes, net income, and working capital.
At the end of Q1 2025, the actual shares outstanding was ~306.7 million versus 321.9, 314.1, and 307.8 at FYE 2022 - 2024.
If SPGI continues to aggressively repurchase shares while they remain undervalued, the FYE2025 shares outstanding could drop to ~300 million. The FYE2024 shares outstanding was 307.8 million so the mid-point of ~300 - ~307.8 million is ~304 million.
To estimate SPGI's valuation using FCF, divide the average of management's guidance (~$5.7B) by ~304 million shares to arrive at ~$18.75 in FCF/share. Divide the current ~$552 share price by ~$18.75 and the forward P/FCF is ~29.44.
If we estimate FY2025's SBC will be ~$0.255B (~$0.247B in FY2024), the FY2025 FCF drops to ~$5.445B ($5.7B - ~$0.255B). Divide this by 304 million shares to get ~$17.91 FCF/share. Divide $492 by ~$17.91 and the P/FCF is ~27.5.
Final Thoughts
In my August 1, 2025 post, I state that a price below ~$510 is a level at which I would consider adding to my exposure. Following the share price pullback, however, I have acquired 100 additional SPGI shares @ $515.09 in a 'Core' account and 100 shares @ $510.82 in a 'Side' account in the FFJ Portfolio on September 18, 2025. My ~$512.96 average purchase price on September 18 is sufficiently close to ~$510 thus prompting the purchases.
The embedded nature of SPGI's benchmarks contribute to the company's strong competitive position and strong operating margins and anticipate SPGI will continue to report steadily improving results. I am, therefore, prepared to acquire shares at what I deem to be a fair valuation even though SPGI's share price could experience further weakness in the short-term.
On April 29, 2025, SPGI announced plans to spin off its Mobility Segment into a standalone public company. This segment has been deemed to be 'non-core' and separation is to occur within 12 - 18 months of April 2025.
The rationale for this spin off is to simplify SPGI's operations and to increase the company's focus on its enterprise strategy.
In my July 27, 2025 CME Group – Market Volatility Drives Record Results post I also indicate:
CME and S&P Global (SPGI) signed a definitive agreement to sell OSTTRA, a leading provider of post-trade solutions for the global OTC market, to investment funds managed by KKR, a leading global investment firm. The terms of the deal equals a total enterprise value of $3.1B, subject to customary purchase price adjustments. Proceeds will be divided evenly between SPGI and CME pursuant to their 50/50 joint venture. The transaction is expected to close in the second half of 2025.
SPGI will be receiving a significant one-time cash inflow from the sale of this joint venture. It will receive another significant cash inflow from the Mobility Segment spin-off. SPGI's capital allocation is exemplary and I anticipate management will deploy these significant cash inflows appropriately so as to improve shareholder value.
At the time of my 2025 Mid-Year Portfolio Review, SPGI was my 6th largest holding; shares were trading at ~$527.30. Excluding the shares I acquired for a young investor, I held 550 shares (350 shares in a 'Core' account and 200 shares in a 'Side' account in the FFJ Portfolio). Following my September 18 purchases, I now hold 450 shares in a 'Core' account and 300 shares in a 'Side' account.
I like the company's long-term outlook and think the company will be far more valuable a decade from now. Hopefully, SPGI's share price will continue to experience weakness thus providing management with further opportunities to appropriately deploy capital.
I wish you much success on your journey to financial freedom.
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long SPGI.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
