In a recent revelation, the investment firm Pershing Square, led by the renowned billionaire investor Bill Ackman, disclosed substantial holdings of approximately $1.1 billion each in S&P Global, Visa, and Mastercard. This move has drawn considerable attention, particularly given the varied market performances of these three entities. While Visa and Mastercard's shares are currently trading close to their record highs, S&P Global has experienced a notable decline, sitting roughly 28% below its 52-week peak. This discrepancy prompts a closer examination of their individual business models, recent financial results, and the factors contributing to their respective market valuations.
The core business operations of S&P Global, Visa, and Mastercard share a common thread: they all generate revenue through fees associated with their respective platforms, whether it's card payments, debt ratings, or index licensing. Crucially, none of these companies undertake lending risks to secure these fees, a characteristic that often appeals to investors seeking stable business models. However, despite this shared foundation, their market trajectories have diverged significantly over the past year, with S&P Global facing a more challenging period compared to its counterparts.
S&P Global's recent stock performance, which saw it closing at $418.80 on Friday—a 28% decrease from its 52-week high of $579.05—can be partly attributed to a significant corporate restructuring. On July 1, the company completed the divestiture of its Mobility division, which included the well-known CARFAX business. Shareholders received one share of the newly independent Mobility Global for each S&P Global share they owned, with Mobility Global shares currently valued at around $20. When accounting for this spin-off, the actual decline for investors who held through the separation is closer to 24%, rather than the initial 28%.
Beyond the mechanical impact of the spin-off, S&P Global's market re-rating also reflects investor scrutiny of its growth profile. In the second quarter, excluding the divested Mobility segment, the company's revenue increased by 11% year-over-year to $3.7 billion. Its Ratings division demonstrated robust growth, with revenue climbing 17% to $1.3 billion, an acceleration from the 13% growth seen in the first quarter. Similarly, the Indices business, responsible for benchmarks such as the S&P 500, reported an impressive 20% revenue increase to $534 million. Despite these strong performances in key segments, other parts of the business, such as Market Intelligence and the Energy division, showed more moderate growth of 6% and 2% respectively. This mixed growth picture, where a substantial portion of the company is expanding at a slower pace, appears to have influenced investor sentiment. Nevertheless, S&P Global's adjusted earnings per share still rose by a commendable 23% to $4.83, buoyed by expanding margins and strategic share repurchases, with expectations to exceed $7 billion in buybacks by 2026.
In contrast, Visa has consistently demonstrated remarkable stability and growth, making it a market favorite. In its fiscal third quarter of 2026 (ending June 30), Visa reported a 14% year-over-year increase in net revenue to $11.6 billion. Payments volume, adjusted for currency fluctuations, grew by 10%, and processed transactions rose by 10% to 71.7 billion. Adjusted earnings per share climbed 11% to $3.32, with GAAP net income reaching $5.6 billion. Visa's growth model, driven by incremental increases in consumer spending and transaction frequency, is highly dependable across various economic conditions. This predictable and robust performance explains why the market consistently assigns a premium valuation to Visa.
Mastercard's performance mirrors that of Visa, showcasing a similar pattern of steady growth and strong financial health. In its second quarter, Mastercard's net revenue increased by 14% year-over-year (12% in constant currency) to $9.3 billion. Cross-border volume also saw a significant rise of 12%. A particularly strong area for Mastercard was its value-added services revenue, encompassing security, analytics, and consulting, which surged by 20%. Both Visa and Mastercard benefit from a resilient business model built on continuous consumer spending, complemented by the expansion of higher-growth services. This inherent predictability allows investors to forecast their future performance with a high degree of confidence, contributing to their elevated market valuations.
The differing valuations of these companies underscore a fundamental market principle: consistency in growth often commands a premium. Visa and Mastercard's ability to deliver consistent, approximately 14% growth quarter after quarter from a reliable source—consumer payments—is a key differentiator. S&P Global's largest segment, Ratings, while strong, is subject to the cyclical nature of corporate debt issuance, which can fluctuate significantly. While its index business is more stable, it represents a smaller portion of overall revenue, and about half of its business is currently growing at a more modest pace of 6% or less. This divergence in growth consistency is reflected in their price-to-earnings ratios: Visa and Mastercard trade at roughly 31 times their earnings over the past year, whereas S&P Global trades at approximately 25 times earnings, and about 24 times its own 2026 adjusted earnings guidance. While the market's premium for steady growth is understandable, the extent of S&P Global's current discount may be an overstatement, especially considering the impact of the spin-off and the impressive performance of its core divisions.
