We came across a bullish thesis on S&P Global Inc. (SPGI) on Substack by Felix. In this article, we will summarize the bulls’ thesis on SPGI. S&P Global Inc. (SPGI)'s share was trading at $470.71 as of April 15^th. SPGI’s trailing and forward P/E were 38.11 and 27.40 respectively according to Yahoo Finance.

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S&P Global is currently trading at a price of $441.50 as of April 9th, which appears to present an undervaluation when compared to its historical performance. The company’s forward price-to-earnings (P/E) ratio is under its five-year median, suggesting that the market may be mispricing its future growth potential. A reverse discounted cash flow (DCF) analysis supports this view, indicating that to generate a 10% annualized return for shareholders, S&P Global’s free cash flow (FCF) must grow by 11.68% annually over the next decade. This is a critical figure to evaluate against both historical performance and analysts' expectations.

S&P Global's expected FCF for 2025 is $5.643 million. After adjusting for stock-based compensation (SBC) and growth capital expenditures (CapEx), the adjusted FCF comes to $5.424 million. Historically, the company has grown its FCF at a compound annual growth rate (CAGR) of 12.36% over the past five years. Furthermore, analysts expect FCF to grow by 15.3% annually going forward. Given this backdrop, the implied growth rate of 11.68% is realistic, considering both S&P Global’s historical growth trajectory and analysts' forecasts.

Taking these factors into account, it can be concluded that S&P Global is slightly undervalued at its current stock price. The company's ability to achieve growth in line with analysts' expectations and its historical performance supports a positive outlook. While the stock is priced to reflect moderate growth, the current valuation leaves room for potential upside if the company delivers on its expected growth targets. Thus, based on this analysis, S&P Global appears to be an attractive investment opportunity at the current price point.

S&P Global Inc. (SPGI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 99 hedge fund portfolios held SPGI at the end of the fourth quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of SPGI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SPGI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.