Using predictive analytics to measure investor response to changes in capital expenditure strategies

Corporate issuers reevaluate their capital allocation strategies to ensure alignment between capital expenditures, investor returns and future strategy considerations.

The global pandemic has caused significant changes to business models, prompting issuers to reevaluate their capital allocation strategies, thus creating a unique opportunity to ensure there is alignment between capital expenditures, investor returns and future strategy considerations.

Predictive Analytics: Issuers are increasingly using predictive analytics to measure investor response to material changes in capital allocation strategies. IHS Markit Situational Analytics empowers teams with net and investor-specific views of risk and opportunity linked with changes to dividends, share repurchases, total payout ratios, leverage, and M&A.

See how a Large Cap North American company weighed the predicted risk of suspending their dividend. Case Study: Dividend Suspension

Benchmarking & Trend Analysis: Data-based validation of capital allocation strategies are quickly becoming a standard annual exercise for best-in-class teams. IHS Markit collaborates with IROs, Treasurers, CFOs, and Boards of Directors to provide a clear view of competitive benchmarks, as well as industry and investor trends.

Scenario Planning: For many teams, scenario forecasting requires various inputs across the balance sheet to weigh options regarding strategies that best align with the goals of the business and will have an optimized market response.

Read about how a client experiencing growth in their cash flow made the decision between buybacks and a dividend issuance for an optimized shareholder return policy. Case Study: Dividend vs. Buyback

Data Science: For Dividend-focused strategy, IHS Markit clients benefit from IHS Markit's Dividend Forecasting service, which provides global forecasting powered by data science for over 28,000 global stocks. This gives corporate issuers a clear view of forecasted competitive dividend strategies as they compete for investor capital.

Click here to see Seven Key Dividend Forecasts for 2022.

ESG: With increasing focus on climate change and regulatory trends, global teams in highly impacted sectors are building in ESG considerations as part of their annual capital allocation exercise. These analyses are particularly relevant for companies going through business shifts seeking to lower environmental impact and enhance sustainability. These issuers are partnering with IHS Markit to understand the potential risk to old-guard investor bases and the opportunity to attract active and passive capital focused on these transitional businesses.

For information on IHS Markit's Capital Allocation practice, please contact SituationalAnalytics@ihsmarkit.com

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.