Is S&P Global the Best Wide-Moat Financial Stock to Buy Right Now?

Warren Buffett, former CEO of Berkshire Hathaway, popularized the term "moat" to describe a company with secure competitive advantages, as if it were protected by a moat around the proverbial castle.

Many of his stock picks over the years had this competitive moat. But one moat-protected stock that Buffett never owned is Standard & Poor's Global (NYSE: SPGI), and I'm not sure why -- it may be the best wide-moat stock in the financial sector.

Buffett does own S&P Global's major competitor, Moody's, and has for a long time, but I think SPGI is an even better stock, with multiple moats.

Image source: Getty Images.

Since 2016, when S&P Global spun off from McGraw-Hill, SPGI stock has had one negative year: 2022, when it fell 29%. But over that 10-year stretch, it has an average annualized return of about 14.5%, beating the benchmark it owns, the S&P 500. The stock price is down 17% year to date, but at its low valuation, it looks like a screaming buy.

Multiple moats

S&P Global's primary moat is its credit ratings business, which is the leader in the space alongside Moody's. Combined, they own about 80% of the market share, while the rest is held by Fitch and a few smaller players.

This is not a business that is easily penetrated because of the regulatory hoops companies have to jump through, the costs and complexities involved, the trust that needs to be established, and the network effect because other companies rely on these ratings. Plus, there is only a need for a limited number of reputable ratings agencies; otherwise, the ratings could become watered down.

So this lucrative, asset-light business is not going anywhere, though it will fluctuate with the market and credit issuance. When credit issuance is high, this business will dominate, but when it is not, S&P has other durable businesses that can fill the void.

The other moat is its indexing business, perhaps the one most associated with the company. S&P is the leading indexer through its various benchmarks, including the S&P 500. This is not its most lucrative business, but it is steady and has been growing, buoyed by huge assets in ETFs that track the S&P 500 and other indexes. In the first quarter of 2026, the indexing business was SPGI's fastest growing, with revenue up 17% year over year.

A solid buy

The third major business is Market Intelligence, the biggest revenue driver, along with ratings. It is one of the market leaders, providing data, intelligence, analysis, and insights for institutions. It recently spun off its mobility/transportation data business to focus more on its core offerings.

The combination of the three major moat-protected segments provides SPGI with a balanced, durable revenue stream that allows the stock to navigate various market conditions, thereby ensuring its consistency. In Q1, SPGI saw revenue increase 10% year over year, while earnings rose 32%. For the full year, it anticipates revenue growth of 6.3% to 8.3%.

The stock is down 17% year to date, due to speculative fears of artificial intelligence (AI) disruption, among other issues. But the stock is as cheap as it's been in a while, trading at 21 times forward earnings. At this valuation, it is a no-brainer buy.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Moody's, and S&P Global. The Motley Fool has a disclosure policy.