Why S&P Global Stock Was Tumbling on Tuesday
Key Points
The confusion stemmed from a recent spinoff of a business unit into a separate company.
Without that unit, the company posted double-digit gains on both the top and bottom lines.
Any time the shares of S&P Global (NYSE: SPGI) are doing worse than the bellwether index the company manages, the S&P 500 index, you know its latest news hasn't been taken positively.
Tuesday morning, S&P Global took the wraps off its latest quarterly earnings report, and there was some confusion about the bottom-line number. In late-session trading, the stock was down by more than 3%, a steeper fall than the S&P 500 index's 0.3% slump at that point.
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Post-split blues?
For its second quarter, S&P Global posted revenue of nearly $4.15 billion, up 10% year-over-year. It also topped the consensus analyst estimate of $4.09 billion.
Image source: Getty Images.
However, that doesn't account for the company's spinoff of its automotive data and analysis business, Mobility Global, into a separate company, a move that took effect at the beginning of July.
On a pro forma basis excluding that unit's results from S&P Global, revenue was just under $3.68 billion, up 11% year over year. Net income not under generally accepted accounting principles (non-GAAP, or adjusted) grew by 19% to almost $1.43 billion, or $4.83 per share. Analysts were collectively expecting $4.75 per share.
Initially, financial news and analysis sites reported the GAAP net income figure, which was $4.08 per share.
All four of S&P Global's legacy business units posted revenue gains in the quarter. The indices operations led the charge with a 20% increase to $534 million. The largest division, market intelligence, increased by 6% to $1.29 billion. Meanwhile, energy rose by 2% to $568 million, and ratings zoomed 17% higher to nearly $1.34 billion.
The glitch was the hitch
Market analysis and tracking companies like S&P Global do well when securities markets are lively, and the company is doing a fine job taking advantage of that opportunity. It feels like the post-earnings sell-off was largely due to that reporting glitch, so I'd take that as a shot at getting this solid performer's stock at a discount.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mobility Global and S&P Global. The Motley Fool has a disclosure policy.