S&P Global (SPGI) To Post Q1 Earnings: A Beat In The Cards?

S&P Global, Inc. (NYSE:SPGI) is slated to report first-quarter 2017 results on Apr 25, before the markets open. In the previous quarter, the company delivered a positive earnings surprise of 6.7%. Notably, the company surpassed the Zacks Consensus Estimate in the last four quarters with an average beat of 6.3%. Nonetheless, it remains to be seen if the company will be able to keep its earnings streak alive.

Let’s see how things are shaping up for this announcement.

Likely Earnings Beat in the Cards

Our proven model shows that S&P Global is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. The Most Accurate estimate for the company stands at $1.42 while the Zacks Consensus Estimate is pegged lower at $1.40. So the difference – the Earnings ESP – is +1.43%. A positive ESP combined with the company’s Zacks Rank #2, makes us reasonably confident of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

What’s Driving the Better-than-Expected Results?

S&P Global is focusing on its core business, which is helping it emerge as a leader among rating providers, benchmark providers and analytics in the global capital as well as commodity markets. It completed several business divestitures in third-quarter 2016 including the sale of J.D. Power, its two pricing businesses SPSE and CMA, and the equity research business. The impact of these divestitures is likely to be seen in its first-quarter results as well.

The company completed the acquisition of SNL Financial for $2.2 billion. It is a strategic fit for S&P Global as its business is in sync with the S&P Capital IQ and Platts businesses, which will help the company avail cost cuts and revenue synergies. Moreover, it will enable global expansion on a greater scale especially within the banking and insurance sectors while media and real estate areas emerge as new opportunities. The acquisition will generate synergies of $70 million of EBITDA (earnings before interest, tax, depreciation and amortization) by 2019 and a tax benefit (net present value) of $550M. It will also be accretive to adjusted earnings per share in 2017 and earnings on a GAAP basis in 2018.

SNL Financial delivered consistent mid-teens revenue growth for the last 10 years. Also, the company’s subscription-based revenue model with high renewal rates and strong future revenue visibility bodes well for S&P Global.

S&P Global has been consistently impressing investors with its earnings performance over the last 16 quarters. It is expected to report better-than-expected earnings in the first quarter as well.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The Coca-Cola Company (NYSE:KO) has an Earnings ESP of + 2.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eli Lilly and Company (NYSE:LLY) has an Earnings ESP of +1.04% and a Zacks Rank #3.

Lockheed Martin Corporation (NYSE:LMT) has an Earnings ESP of +2.90% and a Zacks Rank #2.

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