The stock has moved little despite impressive financial results. Its expansion into private credit is just one avenue to growth. By Todd Chanko
You'd be hard-pressed to find an investor who hasn't heard of the S&P 500. Yet how many of them know that the equity benchmark's parent, S&P Global, could serve as a way to add growth and value to their portfolios?
Despite the company's impressive results last year, its stock gained just 5% as investors shunned companies deemed insufficiently aligned with artificial intelligence. They may want to recheck their prompts. Several tailwinds -- among them, ironically, AI -- are poised to catapult S&P Global past its rough patch.
"Over 95% of our revenue comes from proprietary benchmarks, data, and tools," CEO Martina Cheung said at the company's investor day in November. The company's ownership of these data sets provides AI data-licensing opportunities through third parties. S&P Global sees "AI players as an additional distribution channel" that can only "improve economics with our customers," she says.
It has also been developing its own generative-AI and agentic capabilities in response to customer demand, and it has offered machine-readable data feeds since 2020. In November 2024, it launched ChatIQ, "a GenAI-powered assistant," on its Capital IQ Pro platform.
The company's ratings division -- which is expected to generate about 34% of its $15.3 billion in revenue in 2025 and contributed 41% of third-quarter earnings before interest, taxes, depreciation, and amortization, or Ebitda -- stands to profit from a confluence of macro factors on the horizon.
Should interest rates continue their descent, companies will likely issue more debt, which will require credit ratings. The so-called maturity wall would also help business: "We see over $8 trillion coming due through 2028, all of which needs to be refinanced," said Cheung. "That is significantly higher than the 10-year historical average and about 9% higher over 2024." An increase in global mergers-and-acquisitions activity -- forecast by analysts at Morgan Stanley, Goldman Sachs, and others -- would also trigger an increase in debt issuance and additional opportunities for S&P Global.
Its expansion into private-market data and services -- most recently with the $1.8 billion acquisition of With Intelligence, which provides data for private-credit funds and other alternative investments -- is another growth driver.
"Private-market data, which tends to be much more fragmented, is all highly proprietary information you can't necessarily scrape from the internet," Brian McKnight, an analyst at Tocqueville Asset Management, tells Barron's. "There are certainly synergies that can be unlocked with S&P Global's existing private-markets data sets."
With the acquisition comes over 3,000 customers and an incremental $130 million in revenue, expanding S&P Global's existing private-market data set to 60 million companies.
The New York--based company, founded in 1917 by James McGraw and John Hill, has expanded margins on Ebitda by 1.8 percentage points a year since 2022. Diluted earnings per share, which have grown at a 17% compounded annual growth rate since 2022, are expected to jump 14% in 2025, according to consensus estimates. S&P Global's free cash flow has expanded at a compounded rate of 30% since 2022.
A reliable generator of free cash flow, dividends, and earnings for the past 10 years, the company has an established framework for returning 85% of free cash flow through dividends and share repurchases. A discounted cash-flow valuation -- using the company's weighted average cost of capital of 8.1% and a modest 1.5% perpetual growth on a terminal value of $181.5 billion -- produces a target share price of $722, about 35% above Wednesday's close of $528.12.
If S&P Global continues its current trajectory, the market could reward it with a 12-month forward price/earnings multiple of 39 times, up from its current 26 times. Layering that multiple across a 2026 earnings estimate of $20 a share would result in a stock price of $760. Averaging the two valuation methods yields $741 -- 49% higher than current levels.
S&P Global trades at 26.5 times forward earnings, compared with its five-year average of 39.7 -- a 16% discount to Moody's, the other major public credit-rating firm. As recently as last July, the discount was 20%.
The company generates a 3.6% free-cash-flow yield and is expected to have repurchased about $5 billion of its shares for 2025 when it reports its fourth-quarter results on Feb. 10 -- about a 3.1% return.
Risks to the investment thesis include geopolitical volatility, which can reduce debt issuance. This would have a negative impact on S&P Global's ratings business. Such volatility can depress equity prices, as well, potentially harming the company's S&P Dow Jones Indices unit's revenue. (The unit has no relationship with Barron's publisher, Dow Jones.) Tariffs also pose a risk, albeit indirectly: The company reported in its third-quarter 10-Q that manufacturers have reduced their discretionary budgets in response to tariff uncertainty.
Even with these risks, the stock's current valuation makes for a rich opportunity, especially with the private-credit growth driver. S&P Global could help your portfolio beat the benchmark.
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January 30, 2026 21:30 ET (02:30 GMT)
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