S&P Global rates the creditworthiness of bonds and issuers, licenses the S&P 500 and related indices, sells financial data and workflow software, and publishes Platts commodity benchmarks. Customers are debt issuers, asset managers, exchanges, banks and commodity firms. [S1][S9]
Sources through 2026-07-28 · Report dated 2026-09-08
Business details
How it makes money
Roughly 46% of revenue is subscriptions, 22% per-transaction ratings fees, 9% basis-point fees on assets tracking its indices, and the rest usage-based royalties. Ratings and Indices produce 63% of adjusted operating profit. [S1][S9]
What drives results
Debt-issuance volume: billed issuance rose 25% year on year in Q2 2026, driving a 17% increase in Ratings revenue. [S1][S2]
Assets tracking its indices: ETF assets reached $6.35 trillion, up 34%, lifting asset-linked fees 22%. [S2]
Subscription renewal in Market Intelligence, which grew 6% organically in Q2 2026. [S1]
Key dependencies
Analysis: A functioning primary debt market, since about a fifth of revenue is charged per bond rated. [S1]
Analysis: SEC registration as a rating agency, which makes its ratings usable in investment mandates and capital rules. [S23]
One of the most durable franchises in public markets, at its cheapest multiple in five years, is still priced at 25x forward earnings. Quality is not the question; duration of growth is.
Assessment
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: At 8.85% the base case is $364; at 8.10% it is exactly today's price. The discount rate moves this valuation more than any operating assumption except the permanent growth rate.
Biggest risk
The ratings boom driving current growth is an AI capital cycle. Billed issuance rose 25% in the quarter on hyperscaler borrowing, and capital cycles end.
Four divisions: Ratings sells credit opinions to debt issuers, about half charged per bond; Indices licenses the S&P 500, earning basis points on $6.35 trillion of ETF assets; Market Intelligence sells data subscriptions; Energy sells Platts benchmarks. Ratings and Indices are 48% of revenue, 63% of profit.
The sensitivity of operating profit to changes in revenue when some operating costs are fixed.
In this report: Ratings transaction revenue carries roughly an 85% incremental margin because rating more bonds costs almost nothing extra. That is why a 25% transaction-revenue quarter produced 310 basis points of divisional margin expansion, and why margin falls just as fast when issuance turns.
What the analysis price requires
The price implies owner free cash flow compounding at roughly 5.5% in perpetuity at a 9.4% cost of equity, or a 7.2% revenue CAGR for fifteen years with margins reaching 56%: the franchise outgrowing nominal world GDP indefinitely.
Assessment
A valuation model that works backward from a share price to find combinations of growth, margins, and other assumptions consistent with that price.
In this report: The price implies a 7.2% fifteen-year revenue CAGR with margins reaching 56%, or 5.5% perpetual free-cash-flow growth. Naming that assumption is the core of the disagreement with the market.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: At 8.85% the base case is $364; at 8.10% it is exactly today's price. The discount rate moves this valuation more than any operating assumption except the permanent growth rate.
Our assessment
Hold. Fading growth from 7.4% to 4.0% over fifteen years gives $364, 18% below the price; probability-weighted value is $368. Expected five-year return is about 5.5% a year against a 9.4% cost of equity, roughly 10% from fundamentals less multiple compression. The weakness in my own case: $364 is 20.6x forward earnings, a multiple this stock has not seen in five years.
Debt-issuance volume sets the transaction half of Ratings, where almost all the variance lives. A 20% decline costs about $1.16 of annual EPS at an 85% incremental margin.
Market Intelligence decides a third of revenue. Six percent organic growth fits both a vendor-consolidation winner and an early-stage FactSet, and no disclosure settles it.
The discount rate moves fair value about $40 per 50 basis points, more than any operating variable except permanent growth. It is where my valuation and the market's most plausibly diverge.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: At 8.85% the base case is $364; at 8.10% it is exactly today's price. The discount rate moves this valuation more than any operating assumption except the permanent growth rate.
What it could be worth
Present-value estimates at the analysis date, 8 September 2026, using a fifteen-year explicit free-cash-flow forecast discounted at an 8.85% WACC with 3.5% terminal growth, after deducting the Indices noncontrolling interest and net debt.
Scenarios are conditional estimates, not promised returns.
Bear · USD 207.0000
AI capital expenditure decelerates, hyperscaler issuance falls back, and ratings transaction revenue drops with 85% incremental margins in reverse. Clients replace mid-tier data subscriptions with language models over cheaper feeds, cutting Market Intelligence growth to 2%. The market reprices it as low-growth financial infrastructure.
Issuance normalises rather than collapses, with $11 trillion of maturing rated debt as a refinancing floor. Ratings grows 5-6%, Indices 8-10%, Market Intelligence 5-6% with AI neutral. Margin expands about 30 basis points a year on mix; buybacks retire 2.5% of shares annually.
The AI build-out proves a decade-long capital cycle. Private-markets ratings, growing 60%, scale materially, and Kensho licensing converts trialling clients into consumption revenue because models need verified data. Market Intelligence re-accelerates; the AI fear premium unwinds.
Could not establish: subscription retention rate or annual contract value for Market Intelligence (not disclosed by the company, while MSCI and Moody's disclose equivalents); the exact ownership split of the S&P Dow Jones Indices joint venture, where the Q3 2025 10-Q extract read states a 61% interest against the widely reported 73/27 split with CME Group, so the noncontrolling interest was modelled from the observed income-statement deduction instead; stock-based compensation expense, which the platform does not store and which was not located in the filings read; research and development expense; the reconciliation of management's 2.7x-2.8x gross-leverage guidance to the disclosed balance sheet, against roughly 1.9x computed here; post-spin adjusted free-cash-flow guidance; and the terms and renewal timing of the Cboe SPX index licence.