Where Will S&P Global Stock Be in 5 Years?

S&P Global's (NYSE: SPGI) stock has rallied more than 80% over the past five years and is currently hovering near its all-time high. The financial services leader impressed investors with its robust growth and resistance to macro headwinds, and it could maintain that momentum as the macro environment warms up again.

But will S&P Global's stock head even higher over the next five years? Let's review its business model, growth rates, and valuations to find out.

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What happened to S&P Global over the past five years?

S&P Global provides financial data, credit rating, and analytics services for all of the Fortune 100 companies and 80% of the Fortune 500 companies. It holds a near-duopoly in this market with its smaller competitor, Moody's.

Image source: Getty Images.

Major banks, insurance companies, corporations, universities, and institutional investors all use its services. It's also been weaving in new AI features, including its Spark Assist generative AI copilot, to optimize, accelerate, and automate certain tasks.

From 2019 to 2024, S&P Global's revenue expanded at a compound annual growth rate (CAGR) of 16% as its EPS increased at a CAGR of 8%.

Data source: S&P Global. GAAP basis.

In 2022 and 2023, rising interest rates caused many companies to issue less debt. Those lower issuance rates throttled the growth of its credit ratings business and reduced its net profits.

That earnings decline was exacerbated by the sale of its Engineering Solutions business in May 2023. But in 2024, its net profit rose again as interest rates declined, and it fully lapped that divestiture in the second half of the year.

What will happen to S&P Global over the next five years?

For 2025, S&P Global expects its revenue to rise 5% to 7% as its EPS rises 73% to 76% on the basis of generally accepted accounting principles (GAAP). On a non-GAAP basis, which excludes the noise from the recent divestment of its Engineering Solutions segment and other one-time expenses, it expects its EPS to increase 35% to 37%.

At $533, S&P Global trades at 37 and 31 times the midpoint of this year's GAAP and non-GAAP EPS estimates, respectively. Those forward multiples might seem a bit high, but its EPS should continue to grow at a robust rate over the next few years as interest rates decline and the macro environment stabilizes. It also bought back $3.3 billion in shares in 2024, and it will probably continue to repurchase more shares to buoy its EPS growth over the next few years.

From 2024 to 2027, analysts expect S&P Global's revenue and GAAP EPS to grow at a CAGR of 7% and 14%, respectively. Assuming it maintains its leadership position of the credit rating and financial analytics market, grows its GAAP EPS at a steady CAGR of 10% from 2027 to 2031, and maintains a premium valuation of 35 times forward earnings, its stock could climb another 75% to about $931 per share by 2030. With a lower forward P/E ratio of 25, it would still rise 25% to around $665.

As for its dividend, S&P Global only pays a forward yield of 0.7% today -- but it's actually a Dividend King that has raised its payout annually for 51 straight years. It spent only 20% of its free cash flow (FCF) on its dividend over the past 12 months, so it could certainly raise its dividend more aggressively over the next five years if it wished.

Is S&P Global the right stock to buy today?

S&P Global's wide moat, stable growth rates, and resistance to economic downturns makes it a great stock to buy if you expect interest rates to keep declining. It certainly isn't a hypergrowth stock that will double or triple anytime soon, but it provides investors with balanced exposure to the growing credit rating, financial analytics, and AI markets.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Moody's and S&P Global. The Motley Fool has a disclosure policy.