Is S&P Global's Elevated P/E Ratio Justified? A Deep Dive into Valuation and Growth Prospects

The stock of S&P Global (SPGI) has traded at a price-to-earnings (P/E) ratio of 36.28 as of December 2025, significantly above its 10-year historical average of 31.68 and the Financial Services sector average of 13.46. This premium valuation raises a critical question for long-term investors: Is the market's optimism about S&P Global's future earnings growth sufficient to justify its current multiple, or does it signal overvaluation?

A Premium Over Peers and the S&P 500

S&P Global's P/E ratio places it in a unique position relative to its industry peers and the broader market. While it trades at a discount to Moody's Corporation (38.92), it far exceeds the valuations of major banks such as Bank of America (13.98), Banco Santander (10.79), and Toronto-Dominion Bank (10.41) according to data. Compared to the S&P 500, which averages a P/E in the 30–35 range for large-cap tech and financial firms, S&P Global's multiple appears elevated. This suggests that investors are paying a premium for its market leadership in financial data and analytics, as well as its recurring revenue streams.

However, such a high valuation is not without risks. A P/E ratio significantly above sector averages often reflects heightened expectations for earnings growth. If S&P Global fails to meet these expectations, the stock could face downward pressure as the market recalibrates its multiple.

Earnings Growth: Past Performance and Future Projections

To assess whether the current valuation is justified, it is essential to examine S&P Global's earnings trajectory. Over the past decade, the company has delivered an average annual earnings growth rate of 9.5%, decelerating to 7.4% over the past five years. Notably, its trailing twelve months (TTM) earnings per share (EPS) surged by 49.8% in 2024, driven by strong performance in analytics and stable corporate spending according to financial reports.

Looking ahead, analysts project S&P Global's EPS to grow at a robust 12.9% annually over the next five years, outpacing its historical averages and the sector's typical growth rates. This optimism is rooted in the company's strategic investments in high-growth areas such as private markets and AI-driven solutions. If realized, such growth could justify the elevated P/E ratio, particularly if the company maintains its forward valuation of 35 times earnings. Under this scenario, the stock could reach $931 per share by 2030 according to market analysis.

The Risks of a High Multiple

Despite these positive forecasts, investors must remain cautious. S&P Global's 3-year average EPS growth rate has been negative (-0.5%), highlighting volatility in its earnings performance. This inconsistency underscores the importance of execution risks, such as macroeconomic headwinds or regulatory challenges, which could disrupt its growth trajectory.

Moreover, the company's P/E ratio is already 17% above its historical average, implying that the market is pricing in a margin of error that may not materialize. For instance, if earnings growth slows to the lower end of analyst projections (say, 10.7% annually), the stock's returns could lag behind those of more conservatively valued peers.

Implications for Long-Term Investors

For long-term investors, S&P Global presents a classic trade-off between growth potential and valuation risk. The company's dominance in financial data, coupled with its recurring revenue model, positions it to benefit from secular trends such as the rise of ESG investing and digital transformation in finance. However, the current P/E ratio implies that much of this potential is already priced in.

Investors should monitor two key metrics: (1) the sustainability of S&P Global's earnings growth, particularly in its high-margin analytics and private markets segments, and (2) macroeconomic conditions that could impact corporate spending on financial data services. A slowdown in global economic activity, for example, might pressure margins and force the stock to re-rate downward.

Conclusion

S&P Global's elevated P/E ratio reflects strong investor confidence in its market leadership and growth prospects. While the company's projected EPS growth of 12.9% annually could justify the premium, the valuation leaves little room for error. Long-term investors must weigh the potential for outsized returns against the risks of a re-rating if earnings growth falters. In a market where multiples are often stretched, S&P Global serves as a reminder that high valuations require equally high execution.