S&P Global has the margins, moat and recurring revenue investors dream about.
There’s just one problem:
At today’s price, my DCF says you’re getting exactly what you’re paying for.
KEY ASSUMPTIONS:
Explicit average 5Y/5Y growth @ 4%/4.3%
Long-term growth in perpetuity @ 2.6%
EBITDA Margin 54% -> 57.6%
WACC @ 8.5%
Adj. EBITDA exit multiple of 13.9
Tax rate 22% - forward stat rate due to OECD’s Pillar 2 “Global Minimum Tax”
The input that drives reinvestment is forward-looking Sales to Capital ratio = 3.4
GROWTH PROFILE (FOR CONTEXT)
S&P Global is expected to deliver high-quality mid-to-high single-digit structural growth, supported by recurring subscription revenues, pricing power, rising demand for financial and alternative data, growth in private markets and energy intelligence, increasing debt issuance over time, and continued flows into index-linked products. Following the July 2026 spin-off of Mobility, the remaining business is more concentrated around its higher-margin financial-data, ratings, energy and index franchises. Management targets 7-9% average annual organic constant-currency revenue growth over the medium term, including 6-8% for Market Intelligence, 6-9% for Ratings, 6-8% for Energy and 10-12% for S&P Dow Jones Indices. Growth can be somewhat cyclical in Ratings and Indices because issuance volumes and market levels fluctuate, but the underlying subscription and benchmark businesses provide considerable resilience. Notably, SPGI still delivered 11% revenue growth in Q2 2026. For my DCF a reasonable base case is therefore roughly 7-9% growth during the next five years, gradually fading toward 3-4% as the company matures, before converging toward a terminal growth rate near nominal economic growth.
The -8% Year 1 revenue call is due to the Mobility Global spin-off, which became effective July 1, 2026, with Mobility’s historical results moving to discontinued operations starting in Q3 2026.
EBITDA MARGIN
By 2030, I anticipate the adjusted EBITDA margin will reach approximately 55.7%, marking an increase of about 400 basis points from 2025. This margin growth results from revenue increases, sustained expense control, and the divestment of lower-margin Mobility Global, contributing roughly 100 basis points to the expansion. Generally, S&P Global’s operations have minimal variable costs, and high-single-digit organic revenue growth forecast should support operating leverage.
VERDICT
CL intrinsic value for S&P Global is 409. Valuation suggests that the stock is trading at fair value. Buying a wonderful business at fair value can still be a good idea, especially considering how expensive the market is at the moment.