S&P Global: A Long-Term Owner's View

Judging the industry and competitive landscape. SPGI does not sit in a single industry but in several overlapping high-quality niches: ratings, indices, financial data/analytics, commodity information, and automotive data. They share a common feature: demand persists over the long term with global capital markets, passive investing, risk management, regulatory compliance, and corporate decision-making; but part of it, especially Ratings' transaction revenue, fluctuates with the financing environment. The Indices business benefits from passivization and ETF-ecosystem expansion; ETF assets under management based on S&P Dow Jones Indices grew from 79 billion dollars in 2003 to 4.389 trillion dollars in 2024, showing an extremely strong long-term demand trend. Main competitors differ by segment: Ratings is closest to Moody's; Indices is closest to MSCI; financial data and analytics overlaps with FactSet, LSEG, ICE, and Morningstar. My judgment: this is a good company in a good industry, not an excellent company in a bad industry. Score for industry attractiveness: 4.5 / 5.

Assessing the Moat

S&P Global's moat is not a single advantage but multiple overlapping layers.

First is brand and institutional trust. S&P Global Ratings is an SEC-registered NRSRO, which means it is not an ordinary content provider but a key node at the institutional level of the global credit market. Regulation is not always a positive, but it objectively constitutes a barrier to entry. Correspondingly, S&P Dow Jones Indices is also a foundational reference standard for vast amounts of capital, ETFs, and derivatives; once a customer embeds an index in product prospectuses, investment charters, risk models, and trading systems, the switching cost becomes very high.

Second is data, scale, and workflow embedding. Market Intelligence's subscription revenue is built on distribution, valuation services, analytics, and software platforms; Energy's subscription revenue comes from price assessments, market reports, and analytics; Mobility's subscription revenue comes from vehicle sales/production forecasts, parts and technology forecasts, dealer marketing software, and vehicle-history and insurance-related data. These products are not sold once but continuously embedded in customers' daily decisions. At the end of 2025 the company's deferred revenue was 4.088 billion dollars, which is another angle illustrating customer prepayment and stickiness.

Third is switching costs and network effects. Indices has the strongest network effect: the more ETFs, funds, derivatives, and benchmarks use its indices, the stronger the index brand and the wider the distribution, which in turn attracts more products to adopt it. Ratings' network effect is more of a "reputation network": issuers, investors, underwriters, regulatory frameworks, historical default databases, and methodologies together shape a "widely recognized consensus infrastructure." Market Intelligence and Energy show up more as high switching costs: once data formats, interfaces, screens, models, permission systems, historical series, and internal process interfaces are set up, switching brings hidden risk and migration cost.

Inference: is the moat widening, stable, or narrowing? My judgment: overall stable to widening, but with internal divergence. Indices and part of the data/analytics moat are widening, because ETFs, passive investing, rules-based risk control, and machine-callable data are all expanding; the Ratings moat is more stable, but regulation is always a double-edged sword; scarcity at the raw-data layer may be weakened in an AI environment, but what is truly hard to replicate is the combination of brand + methodology + historical data + embedded workflow + institutional recognition. A competitor can copy one piece without much difficulty, but copying the whole system usually takes many years and billions of dollars of capital, and may still fail to win the same institutional trust and default customer choice.

Fact: can the company raise prices, resist inflation, and ride through downturns? In 2025 and the first quarter of 2026, both transaction and non-transaction revenue in Ratings benefited from better contract terms; and in 2023, a year when the debt-issuance environment was relatively poor, the company still delivered 4.020 billion dollars of operating profit and 3.287 billion dollars of free cash flow, showing that it is not a business that "only makes money in good times." The high margin is not merely a cyclical bonus: in 2025 the company's operating margin reached 42.2%, and in 2023 it was still 32.2%; Indices' 2025 segment operating profit was 1.271 billion dollars against external revenue of 1.839 billion dollars, an extremely high segment margin. Score for moat strength: 4.5 / 5.

Management and Capital Allocation

Fact: governance and management incentives. The company sets clear stock-ownership requirements for management: the CEO must hold company stock worth 7x base salary, the CFO 4x, and other covered executives 3x; as of March 2, 2026, all NEOs met the requirements. The company also has multiple clawback policies and anti-hedging and anti-pledging policies; long-term incentives for most NEOs use a structure of 70% PSU plus 30% RSU, and short-term incentives are explicitly tied to company and individual goals. On institutional design alone, this is a fairly standard and long-term-oriented governance framework.

Fact: the capital-allocation record. Over the past three years the company has consistently made large buybacks and dividends: dividends to shareholders in 2023, 2024, and 2025 were 1.147 billion, 1.134 billion, and 1.170 billion dollars respectively, and buybacks over the same years were 3.301 billion, 3.301 billion, and 5.001 billion dollars; actual year-end shares outstanding fell from 314.1 million in 2023 to 298.8 million in 2025, dropping further to 296.0 million at the end of the first quarter of 2026. This shows that the company is genuinely returning cash to shareholders, rather than just paying lip service to "valuing shareholder returns."

Fact and judgment: is M&A creating value or piling up scale? The company's recent M&A has broadly aimed at strengthening core data and workflows: it acquired Visible Alpha in 2024 and With Intelligence in 2025, both pointing to sell-side consensus-estimate data, private/alternative-asset businesses, and research-workflow expansion; in 2025 it also sold OSTTRA to KKR together with CME, receiving roughly 1.5 billion dollars in cash, about 1.4 billion dollars after tax; meanwhile it is advancing the Mobility spin-off. This set of moves shows that management is not single-mindedly chasing scale but optimizing the portfolio: selling non-core/mature assets, bringing in more synergistic data and analytics assets, and letting the market re-price the automotive-data business through a spin-off. Overall, I find this capital-allocation logic rational and broadly consistent.

Reservations. First, the company bought back 5 billion dollars in 2025 while the stock was not obviously undervalued, which means part of the buyback looks more like a steady capital-return mechanism than a classic "counter-cyclical bargain hunt." Second, in 2025 and 2024 the company carried out restructurings of roughly 1,300 and 1,230 positions respectively, and the related restructuring charges make "adjusted profit" look better, so I weight cash flow more heavily than management's adjusted measures. Third, the 2025 Say-on-Pay support rate fell to 68.8%, clearly below the roughly 96% of the prior year; but the company subsequently expanded shareholder engagement, which at least shows it is willing to respond to outside feedback. Score for management and capital allocation: 4.0 / 5.

Financial Quality and Owner Earnings

The conclusion first: SPGI's profit is largely real cash profit, not "paper profit." Over the past three years, free cash flow has consistently exceeded net income attributable to shareholders; capex is extremely low; operating margin keeps rising; interest coverage is very high; and even in 2023, when the industry environment was relatively weak, the company still maintained strong earnings and cash generation. The only thing investors need to stay skeptical about is that restructuring charges, disposal gains, acquisition-driven amortization, and "adjusted" metrics make headline profit look prettier, so you must always return to cash flow.

Data note: The 2023-2025 revenue, profit, cash flow, capex, and share count come from the 2025 annual report; 2026Q1 comes from the 2026 first-quarter report; 2025 free cash flow follows the company's definition of operating cash flow minus capex minus distributions to non-controlling interest holders.

A few key judgments. First, free cash flow conversion is excellent: in 2023, 2024, and 2025, free cash flow was roughly 125% / 137% / 115% of net income attributable to shareholders. Second, growth does not require heavy capital investment: in 2025 capex was just 1.3% of revenue. Third, leverage is manageable: based on year-end 2025 total debt of 13.088 billion, cash and short-term investments of 1.801 billion, and EBITDA of roughly 7.657 billion, net debt/EBITDA is about 1.5x; based on 2025 operating profit and interest expense, interest coverage is about 22.6x. Fourth, in 2025 accounts receivable rose from 2.867 billion to 3.441 billion dollars, growing faster than revenue, which means the collection cadence warrants ongoing attention, but deferred revenue also rose from 3.694 billion to 4.088 billion, indicating customer prepayment remains strong.

Judging accounting quality. I see no obvious sign of financial fraud or aggressive revenue recognition: the company's audited financial statements and internal controls received unqualified opinions; contract assets are small, just 89 million dollars at the end of 2025; deferred revenue and remaining performance obligations are both consistent with the "collect first, perform later" nature of a subscription/service business. What investors really need to "discount" while reading are the frequently appearing restructuring charges, disposal gains, and acquisition amortization, because these items make certain "adjusted profit" look better than the truly distributable cash.

Estimating owner earnings. I look at this company through two conservative lenses. First, take the company's disclosed 2025 free cash flow of 5.135 billion dollars directly as a "conservative proxy for distributable cash to shareholders," because this figure already deducts capex and distributions to non-controlling interest holders. Second, more strictly: starting from net income to shareholders of 4.471 billion, add back depreciation and amortization of 1.179 billion, but do not treat the 236 million dollars of stock-based compensation entirely as freely distributable cash, while deducting all capex of 195 million and the year's rough working-capital consumption, yielding a "stricter owner earnings" of roughly 4.8 billion to 5 billion dollars. In other words, I would conservatively view SPGI's true distributable earnings power in 2025 as about 5 billion dollars. At the current market cap of roughly 124.28 billion dollars, that is about 24-26x owner earnings.

Intrinsic Value and Margin of Safety

Start with valuation principles. For a company like SPGI, the liquidation-value method is essentially meaningless: of the company's total assets of 61.200 billion dollars at the end of 2025, goodwill is 36.475 billion and net intangible assets are 16.271 billion, together exceeding 52.7 billion dollars; this means what you are buying is not "book assets at a discount" but an institutionalized intangible-asset earnings machine. So the valuation focus must be on discounting owner earnings + peer multiples + a segment/spin-off SOTP perspective.

Method one: owner-earnings discounting. I use a conservative owner-earnings base of 5 billion dollars and estimate three scenarios over a 10-year horizon. Conservative scenario: owner earnings grow 5% per year over the next 10 years, with a discount rate of 9.5% and a terminal growth rate of 3%, implying intrinsic value per share of roughly 311 dollars. Neutral scenario: annual growth of 7% over the next 10 years, a discount rate of 9%, and a terminal growth rate of 3.5%, implying roughly 417 dollars per share. Optimistic scenario: annual growth of 9% over the next 10 years, a discount rate of 8.5%, and a terminal growth rate of 4%, implying roughly 582 dollars per share. The most important thing here is not any single precise number but this: at the current price of 417.6 dollars, the stock sits roughly near my neutral value. That means it is not a cheap stock but one where "you have to pay for quality." I should note that what I use here is a look-through valuation on a pre-spin-off consolidated basis; if the Mobility spin-off lands smoothly, what investors actually hold at that point will be "remaining SPGI + shares of new Mobility Global received," and the valuation basis will naturally change.

Method two: relative valuation. SPGI's current trailing PE is about 26.4x; compared with the closest high-quality information/index/ratings peers, Moody's is about 32.2x, MSCI about 33.6x, ICE about 22.3x, and FactSet about 14.9x. SPGI stands in the middle: slightly more expensive than pure exchanges/basic data services, but slightly cheaper than the purest high-margin ratings/index leaders. Based on SPGI's 2025 free cash flow of 5.135 billion dollars, P/FCF is about 24x; based on 2025 EBITDA of roughly 7.657 billion dollars, a market cap of 124.28 billion dollars, and a rough debt-and-cash calculation, EV/EBITDA is about 17.7x; based on 2025 total shareholders' equity of 31.235 billion dollars, P/B is about 4.0x. But I would stress that PB means little for a company so affected by goodwill and treasury stock and should not serve as a primary basis for judgment. Relative valuation gives me this conclusion: SPGI's price is not absurd, but it is by no means cheap.

Method three: an asset or spin-off perspective. The truly useful "asset method" is not liquidation but a spin-off sum-of-the-parts. Mobility delivered external revenue of 1.747 billion dollars and segment operating profit of 378 million dollars in 2025, and the spin-off is expected to complete by mid-2026, structured to be tax-free for U.S. federal income tax purposes. If you apply a relatively cautious valuation range to Mobility, for example about 3-4x sales or 14-16x segment operating profit, its implied enterprise value would fall roughly in the 5 billion to 7 billion dollars range. This shows two facts: one, Mobility is not small enough to ignore; two, even if you carve Mobility out separately, SPGI's main source of value today still lies in the four core segments of Ratings, Indices, Market Intelligence, and Energy. Since the company has not yet provided complete post-spin-off standalone financials and capital structure, I treat this SOTP only as a supplement, not as the primary valuation anchor.

Overall valuation conclusion. My ranges are as follows: Conservative intrinsic-value range: 300-360 dollars/share. Fair intrinsic-value range: 390-450 dollars/share. Optimistic intrinsic-value range: 520-600 dollars/share. So the current price is roughly in line with fair value and clearly above conservative value. If you require a 20%-30% margin of safety, then the ideal buy price is more likely in the 300-350 dollar range; an acceptable holding price is roughly 350-450 dollars; and if the stock stays above 500 dollars for the long term while fundamentals do not meaningfully accelerate, I would view it as clearly overvalued.

Judging the margin of safety. The current margin of safety is inadequate. The most fragile assumption in the valuation is not "whether the company will keep growing next year" but whether, over the next decade, it can maintain a high margin, high cash conversion, and mid-to-high single-digit organic growth without being eroded jointly by regulation, AI, customer cost-cutting, and multiple compression. If growth comes in below expectations, the margin retreats from today's high, or the market re-rates it from 26x earnings toward 20x, you will not necessarily suffer a disaster at the business level, but you may suffer returns materially below expectations. This is the classic case of "a great company, but a price that gives you little room for error."

Risks, Comparisons, and Final Conclusion

The most important risks. First, competition and technology-substitution risk: the company itself states clearly in its risk factors that competition is intense, and an "inability to innovate or to integrate with new technologies (including AI)" would have a materially adverse effect on the business. Second, regulatory risk: the Ratings business is subject to NRSRO and multi-jurisdiction regulation worldwide, and regulations carry potential directions such as reducing market reliance on ratings, increasing competition, rotating rating agencies, and raising liability standards. Third, cyclical risk: Ratings' transaction revenue remains tied to new debt issuance, structured finance, and loan-rating activity. In 2025 Ratings, transaction revenue was 2.470 billion dollars and non-transaction revenue was 2.254 billion dollars, showing it is not fully recurring. Fourth, spin-off execution risk: if the Mobility spin-off goes poorly or costs exceed expectations, it could affect how the valuation is expressed in the short to medium term. Fifth, valuation risk: SPGI's current free-cash-flow yield is about 4.1%, even below the U.S. 10-year Treasury yield of 4.57% on May 21, 2026, and the effective yield on AAA dollar investment-grade corporate bonds of 5.08%; buying it is essentially a bet on future high-quality growth and capital returns, not on capturing a discount to current cash flow.

The strongest bear case. The bears would most likely say: SPGI's greatness is already largely known and priced in by the market. It is of course a great company, but Ratings still carries an obvious cyclical beta; Indices, though high quality, faces the long-term possibility of compressed passive-investing fees; Market Intelligence faces more open data, model, and workflow competition in the AI era; large buybacks have occurred near prices that are not cheap, which is more EPS engineering than value capture; and the 2026 spin-off makes the near-term valuation basis more complex. I would admit my investment judgment was wrong if the following facts emerged: customer retention deteriorates significantly, Indices asset-linked revenue stagnates for years, Ratings' market position or regulatory license is impaired, free cash flow stays below net income over the long term, M&A integration persistently disappoints, or management keeps buying back heavily at clearly overvalued prices.

Comparison with other opportunities. Looking at the strongest competitors, Moody's is more concentrated in ratings and analytics and is also more expensive; MSCI is equally strong in indices and asset-linked fees and currently has a higher PE than SPGI; ICE and FactSet represent another business form of market infrastructure and workflow data respectively, with lower valuations but a different business mix. Comparing with the index itself, SPY is currently priced at about 745.64 dollars, corresponding to the S&P 500 index at about 7,473 points, and J.P. Morgan materials show the S&P 500's forward PE near May 21, 2026 was about 21.1x; this means SPGI is not cheap relative to the broad market, but its business quality is higher than the index-average company. Comparing with risk-free or high-grade bonds, SPGI's current starting cash-flow yield does not clearly win out, so the premise of investing in it is that you believe it can compound "high quality + growth + buybacks." My judgment: it can occupy capital, but it is better to occupy capital at a better price. If a portfolio could hold only five assets, it would qualify for the watch pool, but at the current price it would not necessarily make the final position directly.

Investment Checklist

Final Investment Conclusion

【Final Rating】 Watch

【One-Sentence Thesis】 This is a superb company of standards, ratings, indices, and a data platform, but buying at the current price is more like buying "long-term quality" than buying "an obvious bargain."

【Core Bull Case】 First, the business mix is high quality, with at least 68%-79% of revenue showing strongly recurring characteristics; second, the margin, cash flow, and capex structure are all excellent, with 2025 free cash flow of 5.135 billion dollars; third, Ratings, Indices, and Market Intelligence form an overlay of institutional, brand, data, and workflow barriers; fourth, the share count keeps shrinking and capital returns are real; fifth, it maintained high profitability through the weak 2023 cycle, proving strong resilience.

【Core Bear Case】 First, there is no obvious margin of safety now; second, Ratings still has cyclicality; third, AI and data competition will keep eroding marginal advantages; fourth, the spin-off brings short-to-medium-term basis complexity; fifth, part of the buybacks occurred at prices that are not cheap.

【Key Assumptions】 The company must keep maintaining high retention, high cash conversion, and mid-to-high single-digit organic growth; Ratings' institutional position must not be obviously weakened; Indices' asset-linked revenue must keep expanding over the long term with the ETF/passive-product ecosystem; M&A integration and the Mobility spin-off must not significantly damage capital-allocation discipline.

【Fair Buy Price】 300-350 dollars/share. The basis is that, after applying conservative-to-neutral assumptions to 5 billion dollars of owner earnings, a roughly 20%-30% margin of safety is required.

【Target Holding Period】 More than 10 years. The real source of returns for this kind of company is not short-term valuation swings but long-term standardized, institutionalized, platform-based cash-flow compounding.

【Expected Annualized Return】 Conservative scenario: 4%-6%; neutral scenario: 8%-10%; optimistic scenario: 11%-13%. This is a rough estimate based on the current starting cash-flow yield, long-term growth assumptions, and potential multiple compression/maintenance, not a short-term target price.

【Maximum Downside Risk】 If the market re-rates it from the current roughly 26x earnings to the low 20x range or lower, while growth slows, margins retreat, and the spin-off goes poorly, a 30%-45% decline in the stock is not hard to imagine; if the fundamental moat is destroyed, it could form a true permanent loss of capital.

【Tracking Metrics】 I suggest tracking on an ongoing basis: the transaction/non-transaction revenue mix in Ratings; Indices asset-linked fees and ETF/AUM data based on S&P DJI; new sales and retention in Market Intelligence; the match between free cash flow and net income to shareholders; capex intensity; net debt/EBITDA; buyback amounts and average buyback prices; the Mobility spin-off timeline and capital structure; M&A integration results; and regulatory and AI-related risk disclosures.

【Signals That Trigger Reassessment】 Customer retention declines and persists; Indices asset-linked revenue stagnates for several consecutive years; Ratings' regulatory position is impaired; free cash flow stays below net income over the long term; large high-price buybacks continue; net leverage rises clearly; capital allocation runs out of control after the spin-off; and core staffing/technology/compliance capabilities weaken systematically.

【Final Recommendation】 Put SPGI on a high-priority watch list, rather than buying a heavy position impulsively at the current price. If you already hold it, I lean toward continuing to hold, focusing on business quality and spin-off progress; if you do not yet hold it, the most rational approach is not to question whether it is a good company but to accept that it is a good company, but the margin of safety it offers a conservative value investor today is still not thick enough. Waiting for a price is often more important than forcing together a thesis.

Open Questions and Limitations: I have not built a complete post-spin-off standalone model for the Mobility spin-off expected to complete by mid-2026, so the valuation above is primarily a "look-through value on a pre-spin-off consolidated basis"; in addition, between 2021-2022 and 2023-2025 there are comparability differences from the IHS Markit consolidation and asset disposals, so I use the earlier years only as a trend reference, not as a precise anchor.

This report is based on public information and does not constitute investment advice. Markets carry risk; invest with caution.