The increased adoption and success of the work-from-home trend are enabling the Zacks Business – Information Services industry to address the rising demand for services that ensure risk mitigation, cost reduction, and productivity improvement. The heightening technology adoption is benefiting companies like S&P Global Inc. SPGI, Intertek Group plc IKTSY, supportingthem to offer digitally transformed, personalized, and value-added services.
About the Industry
The Zacks Business – Information Services industry comprises companies that offer a range of services, including software, data, risk, research, information and analytics solutions. These companies operate in a dynamic business environment characterized by evolving customer behavior, preferences, and demographics. The key focus within the industry is currently on channeling money and efforts toward more effective operational components, such as technology, digital transformation, and data-driven decision-making, to identify demand sources and target end markets. Prominent players include ratings, benchmarks, analytics, data provider S&P Global, and the provider of data analytics solutions, Verisk Analytics.
3 Trends Shaping the Future of the Information Industry
Healthy Demand Environment: The industry is mature and has witnessed a progressively growing business environment in the past few years. Revenues, income and operating cash should continue to grow during the post-pandemic economic improvement.
Demand for Customer-Centric Solutions: The pandemic stoked a many-fold increase in demand for specific solutions that ensure risk mitigation, cost reduction and productivity improvement. These, in turn, have opened up more business opportunities for industry players. These companies are now modifying their business strategies to offer more customer-centric solutions.
Increased Adoption of Technologies: Digital transformation, automation in assembling, and the use of big data in enhancing business information will likely fuel the industry’s growth in the days to come. Companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business – Information Services industry is housed within the broader Zacks Business Services sector. It carries a Zacks Industry Rank #173, which places it in the bottom 30% of the 247 Zacks industries.
The group’s Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business – Information Services industry has underperformed the Zacks Business Services sector and the S&P 500 Composite.
The industry has returned 12.6% compared with the S&P 500 Composite and the broader sector’s growth of 9.8% and 7.7%, respectively, in the said time frame.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month price-to-earnings (P/E), which is commonly used for valuing business information services stocks, the industry is currently trading at 25.26X compared with the S&P 500’s 20.44X and the sector’s 22.03X.
Over the past five years, the industry has traded as high as 31.74X and as low as 20.69X, with a median of 27.04X, as the charts below show.
Price to Forward 12 Months P/E Ratio
2 Business Information Service Stocks in Focus
We are presenting two stocks that are well-positioned to grow in the near term.
Intertek: This quality assurance solutions provider is scaling up its portfolio in high-growth and high-margin sectors on the back of the JLA, CEA, PlayerLync, and Base Met Labs acquisitions. The company is benefiting from its revenue mix, pricing, fixed cost leverage linked to growth, productivity enhancements, and restructuring program, while investing in its assurance, testing, inspection, and certification (AITC) service capabilities for growth.
IKTSY’s global footprint and capital-light business model make it agile and allow it to move swiftly to build additional AITC capability for its clients in the existing or new markets.
Intertek currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2025 EPS has been revised 6% upward in the past 60 days to $3.33. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
S&P Global: This credit ratings, benchmarks, analytics, and workflow solutions provider continuously makes small but impactful acquisitions to enhance its offerings in private markets, sustainability, and energy transition products. It plans to continue such strategic organic investments and opportunistic acquisitions to increase growth and innovation.
The company’s strategic partnership with Amazon Web Services allows it to consolidate contracts and fetch long-term savings through a collaborative partnership. The partnership has brought strategic cooperation to serve customers better by developing new products.
S&P Global currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2025 EPS has increased slightly in the past 60 days to $16.97.
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