The 411 on IHS Markit? New Highs Are In Sight

Another Great Quarter For IHS Markit

IHS Markit NYSE: INFO was not immune to the pandemic but, like so many others, it was able to weather the storm. Where business in one segment fell off it picked up in another, at least enough to sustain the company through the darkest days. Now, more than a year into the crisis and well into the early stages of the recovery, this company is firing on all cylinders and performing above its pre-pandemic levels. Based on the results, the guidance, and the outlook for a continuing if not accelerating economic reopening, we see this company growing above even its newly raised guidance.

“We had another strong quarter as all of our end markets continue to recover and our teams execute at a high level,” said Lance Uggla, chairman and chief executive officer at IHS Markit.

A Strong Quarter For IHS Markit Will Lead To Another

IHS Markit reported $1.18 billion in consolidated revenue to beat the consensus by 350 basis points. The revenue is good for a year-over-year gain of 14.6% but that is against a fairly easy comp. Last year in the second quarter IHS Markit revenue fell roughly 10% which is why the two-year comparison is the better view. As good as the 14.6% year-over-year rebound is, it wouldn't mean much if the company was still performing below the pre-pandemic levels and it's not. IHS Markit revenue is up 3.5% over the past two years and on track to continue growing.

Within that 14.6%, organic growth totaled 13% and acquisitive growth 1.6%. On a segment basis, the transportation segment grew 41% to $344 million dollars to lead the company in terms of strength. The Transportation segment is the second-largest contributor to revenue and equal to about 30% of the net. Financial Services, the largest segment as a percentage of net revenue, grew 11% including 9% organic growth and 2% acquisitional growth. The two smallest segments, resources and Consolidated Marketing Solutions, grew 1% and 2% respectively.

Moving down to the bottom line, the results are strong as well. The GAAP EPS of $0.40 missed by 7 cents but that was offset by a substantial beat at the adjusted level and improvements in cash flow. On an adjusted basis, EPS of $0.81 beat by 1 cent while cash flow topped $372 million with more than $300 million in free cash flow.  The Q2 results were so strong in fact, they gave management the confidence to restate the guidance. The company is now expecting fiscal 2021 eps in the range of $3.15 the $3.17 compared to a prior range of $3.11 to $3.16 and the consensus of $3.16.

“Our strong Q2 and first-half results were in line with our expectations and we remain on track to deliver strong full-year results,” said Jonathan Gear, chief financial officer at IHS Markit.

The Technical Outlook: IHS Markit Moves Up To New Highs

Shares of IHS Markit have been trending strongly higher since hitting the bottom last March and it looks like they will continue to do so. The Q2 results and guidance have shares up In the pre-market session and already trading at a new all-time high. The move is supported by both indicators and should carry the stock up to the $116 level at the very least. Assuming results continue to improve as we expect, the stock should continue to trend higher into the end of the year.

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