Members Only: S&P Global (SPGI) – A Quiet Giant With a Powerful Moat

My Fair Value Estimate: $565

S&P Global is one of those companies most people never think about… yet the entire financial world depends on it. It provides the data, ratings, and benchmarks that keep global markets running. This is a business with elite margins, steady growth, and a very wide moat.

Below is a clean, simple breakdown of what makes SPGI such a strong long-term compounder.

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1. What S&P Global Does

SPGI’s job is simple:
It sells essential information that banks, investors, companies, and governments cannot operate without.

Its main businesses:

• Ratings: Credit ratings for companies, governments, and structured products.
• Market Intelligence: Financial data, analytics, software, and research tools.
• Indices: Famous benchmarks like the S&P 500, used by trillions of dollars in ETFs and funds.
• Commodity Insights: Energy and commodity pricing and analytics.
• Mobility: Auto and transportation data (this division will be spun off).

These are not “optional” products. They are embedded into the daily workflow of global finance.

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2. How SPGI Makes Money

Mostly Recurring Revenue

Around 90–96% of its revenue shows up every year automatically through subscriptions and long-term contracts.

High-Margin Segments

• Indices: 70%+ profit margins — one of the most profitable businesses in the financial world.
• Ratings: Over 60% margins.
• Market Intelligence & Commodity Insights: Around mid- to high-40s margins.

These margins show you one thing clearly:
SPGI sells information, not heavy products. And information scales extremely well.

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3. Why SPGI Has a Wide Moat

1. The S&P 500 is irreplaceable

Once trillions of dollars track the S&P 500, no one is switching to a different index. Too much history, regulation, and customer trust is built into it.

2. Ratings are built into regulations

Many investment rules require ratings from agencies like S&P. This creates a huge barrier for new competitors.

3. High switching costs

Companies rely on SPGI’s data in their models, risk systems, and research platforms. Replacing it would take months and cost millions — so they don’t.

4. Brand and reputation

S&P is one of the most recognized names in global finance.

5. Capital-light compounder

No factories, no large assets — just data, software, and experts. This allows SPGI to generate massive free cash flow year after year.

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4. Financial Snapshot (as of this writing)

Strong Growth

• 2025 revenue: $15.0B, up 9%.
• 5-year revenue CAGR: ~16%.
• Adjusted EPS growth in 2024: +25%.

Elite Margins

• Company-wide operating margin: ~50%.
• Indices segment: 70%+.
• Ratings: ~60%+.

Solid Balance Sheet

• Debt/EBITDA: ~1.6x (very safe).
• 5 yr ROE: ~66.7%.
• 5 yr ROIC: ~18.7%

Shareholder Returns

• Dividend yield: ~0.8%, with decades of increases.
• Large share buybacks year after year.

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5. Growth Drivers

1. Rising global debt issuance

More companies issuing bonds = more ratings revenue.

2. Passive investing boom

More ETFs and index funds = more index licensing fees.

3. Data and analytics demand

Every year, institutions need more detailed, more accurate, and more timely data.

4. Private markets expansion

SPGI is acquiring new datasets in hedge funds, private equity, and alternative investments.

5. Mobility spin-off

Letting the auto data business separate will make SPGI’s core business even more focused and higher-quality.

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6. Risks to Watch

• Ratings is cyclical: When bond issuance slows, Ratings revenues dip.
• Regulation: Ratings agencies always face potential legal or regulatory challenges.
• Competition from MSCI and FTSE: Particularly in indices and data.
• Data becoming commoditized: SPGI must keep innovating to stay ahead.

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7. Valuation: Is SPGI a Buy?

Current price: ~$493

My intrinsic value estimate: $565

→ About 15% upside.

Given SPGI’s:

• Wide moat
• Recurring revenue
• High margins
• Mid-teens EPS growth potential

…it remains one of the best “high-quality compounders” in the market.

If you want predictable, durable growth with very little business risk, SPGI fits that profile perfectly.

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Bottom Line

S&P Global is not exciting on the surface — but it is one of the most powerful behind-the-scenes companies in global finance. Its information is essential, its moat is extremely wide, and its business model is built for long-term compounding.

At today’s price, SPGI offers a fair entry point for patient investors, with long-term returns likely in the low-to-mid teens.