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Vitalii Liubimov's Avatar
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Nov 30, 2020

M&A Activity Puts Market Information Services Industry in the Spotlight

S&P Global (SPGI) announced on November 30 that it would be acquiring IHS Markit (INFO) for $44 billion. The deal is one of the two largest mergers of 2020 and it has put the market data services industry in the spotlight.

This particular merger was of major interest to me as I have S&P Global, MSCI (MSCI) and Factset Research (FDS) in my 20/2o Model Portfolio. The reason those three stocks got my attention in the first place was due to their earnings and revenue growth. If we look at the Tickeron Screener for these three stocks, all three have really good SMR Ratings. The SMR rating includes sales growth, profit margin, and return on equity—three important fundamental indicators.

The SMR rating is the only fundamental category where all three rank above average, but both MSCI and Factset Research score very well in the Valuation Rating and the Profit vs. Risk rating.

S&P Global scores poorly in its Valuation Rating and the Profit vs. Risk Rating. Those are the only two areas that are a concern for the stock though. MSCI scores poorly in the Outlook Rating while Factset Research scores poorly in its seasonality score. Between the three stocks, those are the only four areas where there is any hint of negativity.

On the technical side, there isn’t a single bearish signal among the three stocks and the seven different indicators. All 21 readings are either neutral or bullish. S&P Global and Factset Research both received bullish signals from their stochastic indicators on November 30 which I thought was interesting. Those two stocks also received bullish signals from the MACD indicators on the same date.

Another area of analysis that got my attention for the three stocks was the sentiment. None of three stocks have extremely high levels of optimism being displayed toward them and Factset Research has quite a bit of pessimism being directed toward it. Looking at the analysts’ ratings for Factset, there are 16 analysts covering the stock with nine “hold” ratings and seven “sell” ratings. Not a single analysts ranks the stock as a buy and that is hard to believe given the company’s strong fundamentals.

S&P Global has seven “buy” ratings and four “hold” ratings while MSCI has six “buy” ratings, five “hold” ratings, and one “sell” rating. Both of those buy percentages are below average.

Turning our attention to the short interest ratios, Factset Research’s ratio is above average at 4.7, while S&P Global and MSCI have short interest ratios that are slightly below the average reading.

When you compare the three companies in all categories, you can see how well they stack up against one another and how they compare to other stocks based on the fundamental and technical analysis.

Related Ticker: SPGI

SPGI's MACD Histogram just turned positive

The Moving Average Convergence Divergence (MACD) for SPGI turned positive on April 29, 2024. Looking at past instances where SPGI's MACD turned positive, the stock continued to rise in of 46 cases over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on April 29, 2024. You may want to consider a long position or call options on SPGI as a result. In of 83 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

SPGI moved above its 50-day moving average on May 03, 2024 date and that indicates a change from a downward trend to an upward trend.

The 10-day moving average for SPGI crossed bullishly above the 50-day moving average on May 10, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 11 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SPGI advanced for three days, in of 367 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 404 cases where SPGI Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The 10-day RSI Indicator for SPGI moved out of overbought territory on May 23, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 53 similar instances where the indicator moved out of overbought territory. In of the 53 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 65 cases where SPGI's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPGI declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

SPGI broke above its upper Bollinger Band on May 03, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 74, placing this stock better than average.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. SPGI’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.000) is normal, around the industry mean (5.506). P/E Ratio (51.894) is within average values for comparable stocks, (35.580). Projected Growth (PEG Ratio) (1.518) is also within normal values, averaging (2.610). Dividend Yield (0.009) settles around the average of (0.030) among similar stocks. P/S Ratio (10.893) is also within normal values, averaging (106.506).

Notable companies

The most notable companies in this group are Morgan Stanley (NYSE:MS), Goldman Sachs Group (NYSE:GS), Charles Schwab Corp (The) (NYSE:SCHW), CME Group (NASDAQ:CME).

Industry description

These banks specialize in underwriting (helping companies with debt financing or equity issuances), IPOs, facilitating mergers and other corporate reorganizations and acting as a broker or financial advisor for institutions. They might also trade securities on their own accounts. Investment banks potentially thrive on expanding its network of clients, since that could help them increase profits. Goldman Sachs, Morgan Stanley and CME Group Inc are some of the largest investment banking companies.

Market Cap

The average market capitalization across the Investment Banks/Brokers Industry is 10.83B. The market cap for tickers in the group ranges from 13 to 928.5B. PKRSF holds the highest valuation in this group at 928.5B. The lowest valued company is BFCH at 13.

High and low price notable news

The average weekly price growth across all stocks in the Investment Banks/Brokers Industry was -1%. For the same Industry, the average monthly price growth was 5%, and the average quarterly price growth was 16,163%. ABSOF experienced the highest price growth at 83%, while SWIN experienced the biggest fall at -89%.

Volume

The average weekly volume growth across all stocks in the Investment Banks/Brokers Industry was 52%. For the same stocks of the Industry, the average monthly volume growth was 46% and the average quarterly volume growth was 126%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 59
P/E Growth Rating: 66
Price Growth Rating: 54
SMR Rating: 71
Profit Risk Rating: 73
Seasonality Score: 4 (-100 ... +100)
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SPGIDaily Signal changed days agoGain/Loss if shorted
 
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