Moody's (MCO) AI Stock Analysis

• Market Cap: $87.80B
• Dividend Yield: 0.77%
• Average Volume (3M): 563.58K
• Price to Earnings (P/E): 42.2
• Beta (1Y): 1.20
• Revenue Growth: 15.95%
• EPS Growth: 26.38%
• Country: US
• Employees: 15,795
• Sector: Financial
• Sector Strength: 78
• Industry: Financial - Data & Stock Exchanges
• EPS (TTM): 3.83
• Shares Outstanding: 179,900,000
• 10 Day Avg. Volume: 610,949
• 30 Day Avg. Volume: 563,575
• PEG Ratio: 14.66
• Price to Book (P/B): 22.86
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 33.88
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 3.23
• Enterprise Value/Gross Profit: 17.78
• Enterprise Value/Ebitda: 7.38
• 1Y Price Target: $506.36
• Price Target Upside: 3.76% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 75 Outperform
• Price Target: ―

Moody's Corporation demonstrates strong financial performance and positive long-term prospects, driven by robust revenue growth and strategic investments. Despite technical analysis indicating potential short-term weaknesses and a premium valuation, the company's solid market position and focus on innovation support a favorable outlook.

Positive Factors

Financial Performance

The first quarter results were good, with revenue 8% above consensus and an adjusted EBITDA margin of 51.7%, which was higher than expected.

Market Opportunities

The private credit market is increasingly seeking ratings from best-in-class rating agencies like MCO, presenting a growing opportunity for the company.

Negative Factors

Issuance and Revenue Guidance

Guidance was lowered due to anticipated weaker issuance growth impacting MIS revenue and margins.

Macroeconomic Uncertainty

There is near-term uncertainty around the macroeconomic environment, which may lead to lower issuance activity and delayed decision-making for clients.

Moody's Business Overview & Revenue Model

Company Description

Moody's Corporation (MCO) is a global integrated risk assessment firm that empowers organizations to make better decisions. The company primarily operates through two segments: Moody's Investors Service (MIS), which provides credit ratings, research, and risk analysis; and Moody's Analytics (MA), which offers software, advisory services, and research for financial risk management. Headquartered in New York City, Moody's is a prominent player in the financial services sector, known for its expertise in credit ratings, risk assessment, and data analytics.

How the Company Makes Money

Moody's Corporation generates revenue through its two main business segments, Moody's Investors Service (MIS) and Moody's Analytics (MA). MIS is the company's largest revenue source, generating money by providing credit ratings and research. Issuers of debt securities, such as corporations, municipalities, and governments, pay Moody's to rate their creditworthiness, which is essential for the issuers to access capital markets. Additionally, investors and financial institutions subscribe to Moody's research and analysis for informed decision-making. The Moody's Analytics segment earns revenue by offering a suite of products and services, including risk management software, economic research, and advisory services, to financial institutions and corporations. Moody's also benefits from strategic partnerships that enhance its product offerings and expand its market reach, contributing to its overall earnings.

Moody's Financial Statement Overview

Summary

Moody's financial health is robust, characterized by strong profitability and effective cash generation. The company shows a solid growth trajectory with a healthy profit margin and effective use of equity. However, reliance on debt and a slight decrease in cash flow growth are areas to monitor.

Income Statement

Moody's demonstrates strong profitability with a consistent growth trajectory. The TTM gross profit margin is robust at 69.73%, and the net profit margin is healthy at 29.15%. Revenue growth from the previous year is 21.83%, indicating solid revenue generation. EBIT and EBITDA margins are strong at 40.62% and 38.29%, respectively, reflecting operational efficiency.

Balance Sheet

Moody's maintains a stable financial position with a debt-to-equity ratio of 1.93, indicating reliance on debt but within manageable levels. The return on equity is impressive at 56.92%, showcasing effective use of equity to generate profits. However, the equity ratio of 24.51% suggests moderate leverage, which could pose potential risks if not managed carefully.

Cash Flow

The cash flow analysis highlights Moody's ability to generate substantial cash, with a free cash flow growth rate of -9.06% when comparing TTM to the previous annual report, which reflects slight decrease but remains strong. The operating cash flow to net income ratio of 1.34 and free cash flow to net income ratio of 1.23 indicate effective cash conversion from earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.23B	7.09B	5.92B	5.47B	6.22B	5.37B
Gross Profit	5.04B	5.14B	4.23B	3.85B	4.58B	3.90B
EBITDA	2.91B	3.33B	2.61B	2.33B	3.09B	2.66B
Net Income	2.11B	2.06B	1.61B	1.37B	2.21B	1.78B
Balance Sheet
Total Assets	15.10B	15.51B	14.62B	14.35B	14.68B	12.41B
Cash, Cash Equivalents and Short-Term Investments	2.20B	2.97B	2.19B	1.86B	1.90B	2.70B
Total Debt	7.14B	7.75B	7.42B	474.00M	560.00M	521.00M
Total Liabilities	11.24B	11.78B	11.15B	14.35B	11.76B	10.65B
Stockholders Equity	3.70B	3.56B	3.32B	2.52B	2.92B	1.76B
Cash Flow
Free Cash Flow	2.50B	2.52B	1.88B	1.19B	1.87B	2.04B
Operating Cash Flow	2.82B	2.84B	2.15B	1.47B	2.00B	2.15B
Investing Cash Flow	-736.00M	-1.06B	-247.00M	-262.00M	-2.62B	-1.08B
Financing Cash Flow	-2.44B	-1.45B	-1.58B	-1.21B	-122.00M	-351.00M

Moody's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 488.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCO, the sentiment is Positive. The current price of 488.03 is above the 20-day moving average (MA) of 480.77, above the 50-day MA of 469.12, and above the 200-day MA of 472.90, indicating a bullish trend. The MACD of 2.52 indicates Negative momentum. The RSI at 58.38 is Neutral, neither overbought nor oversold. The STOCH value of 69.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCO.

Moody's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SPGI	80 Outperform	$158.78B	40.65	11.68%	0.74%	12.98%	42.72%
MORN	78 Outperform	$13.22B	35.14	25.68%	0.58%	10.11%	79.71%
FDS	77 Outperform	$16.75B	31.87	26.35%	1.00%	5.07%	4.19%
MCO	75 Outperform	$87.80B	42.16	57.90%	0.77%	15.95%	26.38%
MSCI	68 Neutral	$44.60B	39.64	-117.99%	1.25%	11.67%	-0.89%
Sector *	67 Neutral	$16.66B	11.44	9.71%	3.91%	11.61%	-10.70%
DNB	62 Neutral	$4.05B	―	-0.64%	2.20%	2.52%	42.27%

Moody's Corporate Events

Moody’s Reports Strong Q1 2025 Performance

Moody’s Corporation reported a strong performance for the first quarter of 2025, with revenues reaching $1.9 billion, marking an 8% increase from the previous year. Both Moody’s Analytics and Moody’s Investors Service saw revenue growth of 8%, despite a 1% negative impact from foreign currency translation. The company also achieved record revenue in its Ratings franchise, driven by demand for high-quality credits and refinancing activities. Operating expenses rose by 9% due to investments, restructuring charges, and M&A activities. Moody’s updated its full-year guidance, projecting adjusted diluted EPS growth of 9% at the midpoint, reflecting its financial strength and commitment to long-term value creation amidst market volatility.