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Moody's Corp. (MCO)
NYSE:MCO
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Moody's (MCO) AI Stock Analysis

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MCO

Moody's

(NYSE:MCO)

Rating:79Outperform
Price Target:
$582.00
▲(14.17% Upside)
Moody's overall stock score is driven by strong financial performance and positive earnings call sentiment, highlighting strategic growth initiatives and robust revenue expansion. However, the high valuation and neutral technical indicators slightly temper the score.
Positive Factors
Earnings
Moody’s second-quarter results came in nicely above expectations, with revenue exceeding both the model and Street predictions.
Financial Performance
The adjusted operating margin was 50.9%, which is higher than expected, driven by revenue upside.
Strategic Positioning
MCO is well-positioned to capitalize on the growth in private credit, benefiting from a major capital shift from bank balance sheets to private credit markets.
Negative Factors
Client Behavior
There is a risk that clients delay decision-making due to recent macro uncertainty and market volatility.
Leadership Changes
The stock could see some pressure as Mr. Tulenko was well-respected by the Street.
Market Conditions
As debt issuance trends are expected to slow, this could impact the stock.

Moody's (MCO) vs. SPDR S&P 500 ETF (SPY)

Moody's Business Overview & Revenue Model

Company DescriptionMoody's Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody's Investors Service and Moody's Analytics. The Moody's Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as and structured finance securities. This segment provides ratings in approximately 140 countries. Its ratings are disseminated through press releases to the public through electronic media, including the internet and real-time information systems used by securities traders and investors. This segment has rated approximately 5,000 non-financial corporates; 3,600 financial institutions; 16,000 public finance issuers; 145 sovereigns; 47 supranational institutions; 459 sub-sovereigns; and 1,000 infrastructure and project finance issuers, as well as 9,100 structured finance deals. The Moody's Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets; and offers subscription based research, data, and analytical products comprising credit ratings, credit research, quantitative credit scores and other analytical tools, economic research and forecasts, business intelligence and company information products, commercial real estate data and analytical tools, and on-line and classroom-based training services, as well as credentialing and certification services. It also offers offshore analytical and research services with learning solutions and certification programs; and software solutions, as well as related risk management services. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York.
How the Company Makes MoneyMoody's generates revenue through several key streams. The largest portion comes from its Moody's Investors Service segment, where the company earns fees for providing credit ratings and research on debt securities and issuers. This segment benefits from the ongoing demand for independent credit assessments, especially during periods of market volatility. The Moody's Analytics segment contributes to revenue by offering subscription-based access to proprietary data, analytical tools, and software solutions. This segment targets financial professionals seeking to mitigate risk and enhance decision-making. Additionally, Moody's has formed strategic partnerships and collaborations with financial institutions and technology firms, enhancing its service offerings and expanding its customer base. Overall, Moody's revenue model is supported by a combination of transactional fees, subscription services, and value-added analytics, allowing the company to leverage its expertise in risk assessment and financial insights.

Moody's Key Performance Indicators (KPIs)

Any
Any
Percent of Revenue Recurring
Percent of Revenue Recurring
Shows the portion of revenue that is recurring, indicating the stability and predictability of the company's income and its ability to sustain long-term growth.
Chart InsightsMoody's saw a notable decline in the percentage of recurring revenue in early 2024, dropping from a peak in 2023. This shift may reflect the impact of market uncertainties and revised issuance guidance, as highlighted in the earnings call. Despite these challenges, Moody's is experiencing robust revenue growth and is advancing in AI and private credit solutions, which could stabilize and potentially increase recurring revenue in the future. However, external pressures like trade tensions and government contract attrition remain significant risks.
Data provided by:Main Street Data

Moody's Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook driven by revenue growth, strategic partnerships, and significant expansion in private credit and GenAI deployment. However, challenges in specific segments like Corporate Finance and Financial Institutions, along with Strategic Finance issuance declines, were noted.
Q2-2025 Updates
Positive Updates
Revenue Growth
Moody's achieved a revenue of $1.9 billion in Q2 2025, marking a 4% year-over-year growth despite challenging conditions.
Operating Margin Improvement
The adjusted operating margin increased by 130 basis points to 50.9% compared to the previous year.
Private Credit Expansion
Revenue related to private credit grew by 75% in the second quarter, contributing significantly across multiple lines of business.
Moody's Analytics Performance
Analytics division saw an 11% revenue growth with an adjusted operating margin of 32.1%, a 360 basis point improvement year-over-year.
Strategic Partnerships
Moody's announced a significant partnership with Microsoft, integrating Moody's data into Microsoft's supply chain, compliance, credit, and KYC functions.
GenAI Deployment
Approximately 40% of Moody's products now include GenAI capabilities, with customers who adopted these solutions showing stronger engagement and growth.
Negative Updates
Corporate Finance Revenue Decline
Corporate Finance transaction revenue decreased by 6% year-over-year due to slowed bank loan issuance and subdued M&A activity.
Financial Institutions Revenue Decline
Transaction revenue in Financial Institutions declined by 6% year-over-year, primarily due to lower issuer activity in the insurance sector.
Structured Finance Issuance Drop
Structured Finance issuance declined by 25% as market volatility and wider spreads affected activity in April.
KYC and Insurance Challenges
Strategic termination of a partnership and an account loss following a merger impacted growth in KYC and Insurance segments.
Company Guidance
During the Moody's Corporation Second Quarter 2025 Earnings Call, significant guidance was provided for the fiscal year 2025. Moody's narrowed its guidance ranges for several key metrics, including rated issuance, MIS revenue, and EPS. The company reported a strong second quarter performance, with revenue of $1.9 billion, reflecting a 4% year-over-year increase, and an adjusted operating margin of 50.9%, which is up 130 basis points from the previous year. Adjusted diluted EPS grew by 9% to $3.56. Moody's Analytics demonstrated robust growth, with revenue increasing by 11% and recurring revenue growing by 12%, leading to an adjusted operating margin of 32.1%, a 360 basis point improvement year-over-year. The company also highlighted the strategic role of private credit as a significant growth driver, contributing nearly 25% of first-time mandates and showing a 75% revenue growth in the second quarter. Moody's reaffirmed its full-year guidance for Moody's Analytics, expecting high single-digit revenue and ARR growth, and maintained its adjusted operating margin guidance at 32% to 33%. The call emphasized Moody's ongoing investments in strategic areas such as AI, private markets, and partnerships, positioning the company for long-term sustainable value creation.

Moody's Financial Statement Overview

Summary
Moody's demonstrates strong financial performance with solid revenue and profit margins. The company manages costs efficiently, maintaining a robust gross profit margin of 71.3% and a net profit margin of 29.2%. Cash flow metrics are impressive, though a reliance on debt financing poses a potential risk.
Income Statement
85
Very Positive
Moody's has demonstrated strong financial performance with a notable increase in revenue, evidenced by a revenue growth rate of 3.1% from the previous year. The Gross Profit Margin remains robust at approximately 71.3% for the TTM, indicating efficient cost management. Net Profit Margin stands at 29.2%, showcasing solid profitability. While EBIT and EBITDA margins are healthy at 40.5% and 44.8% respectively, indicating effective operational control, a slight decline in EBITDA margin compared to the previous year suggests a need for cautious monitoring.
Balance Sheet
78
Positive
The balance sheet reflects a sound financial position, with a Debt-to-Equity Ratio of 1.84 indicating a moderate level of leverage relative to industry standards. Return on Equity is strong at 54.0%, driven by high profitability. However, the Equity Ratio of 25.5% suggests a reliance on debt financing, which could pose a risk if market conditions change unfavorably. Overall, the company has maintained stability with a growing equity base.
Cash Flow
82
Very Positive
Moody's exhibits impressive cash flow metrics with a strong Operating Cash Flow to Net Income Ratio of 1.26, indicating efficient cash generation relative to profits. Free Cash Flow remains robust, although it showed a slight decrease from the previous year by 3.0%. The Free Cash Flow to Net Income Ratio of 1.15 further highlights the company's ability to convert income into cash, supporting sustainable operations and potential growth initiatives.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue7.31B7.09B5.92B5.47B6.22B5.37B
Gross Profit4.86B4.71B3.85B3.52B4.32B3.68B
EBITDA3.44B3.33B2.52B2.31B3.25B2.68B
Net Income2.13B2.06B1.61B1.37B2.21B1.78B
Balance Sheet
Total Assets15.49B15.51B14.62B14.35B14.68B12.41B
Cash, Cash Equivalents and Short-Term Investments2.29B2.97B2.19B1.86B1.90B2.70B
Total Debt7.28B7.75B7.42B7.86B7.97B6.94B
Total Liabilities11.38B11.78B11.15B11.66B11.76B10.65B
Stockholders Equity3.95B3.56B3.32B2.52B2.73B1.57B
Cash Flow
Free Cash Flow2.37B2.52B1.88B1.19B1.87B2.04B
Operating Cash Flow2.68B2.84B2.15B1.47B2.00B2.15B
Investing Cash Flow-767.00M-1.06B-247.00M-262.00M-2.62B-1.10B
Financing Cash Flow-2.50B-1.45B-1.58B-1.21B-122.00M-328.00M

Moody's Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price509.76
Price Trends
50DMA
504.59
Positive
100DMA
483.12
Positive
200DMA
480.41
Positive
Market Momentum
MACD
1.45
Positive
RSI
49.88
Neutral
STOCH
27.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCO, the sentiment is Neutral. The current price of 509.76 is below the 20-day moving average (MA) of 513.65, above the 50-day MA of 504.59, and above the 200-day MA of 480.41, indicating a neutral trend. The MACD of 1.45 indicates Positive momentum. The RSI at 49.88 is Neutral, neither overbought nor oversold. The STOCH value of 27.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MCO.

Moody's Risk Analysis

Moody's disclosed 18 risk factors in its most recent earnings report. Moody's reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Moody's Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$91.45B43.3255.18%0.72%11.47%16.14%
76
Outperform
$167.44B42.1511.76%0.70%10.72%23.30%
70
Outperform
$14.11B26.9526.35%1.15%5.07%4.19%
70
Outperform
$43.92B37.61-117.99%1.23%10.48%0.98%
68
Neutral
$17.88B11.6810.28%3.72%9.78%1.27%
66
Neutral
$11.07B27.9226.51%0.67%8.23%64.35%
63
Neutral
$4.08B-1.16%2.19%1.97%-14.06%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MCO
Moody's
509.76
28.84
6.00%
FDS
Factset Research
373.32
-53.09
-12.45%
SPGI
S&P Global
548.44
38.79
7.61%
MORN
Morningstar
262.42
-49.06
-15.75%
MSCI
MSCI
553.91
-12.13
-2.14%
DNB
Dun & Bradstreet Holdings
9.15
-2.55
-21.79%

Moody's Corporate Events

Business Operations and StrategyFinancial Disclosures
Moody’s Reports 4% Revenue Increase in Q2 2025
Positive
Jul 23, 2025

Moody’s Corporation reported a 4% increase in second-quarter 2025 revenue, reaching $1.9 billion, with Moody’s Analytics showing an 11% growth and Moody’s Investors Service remaining flat. The company highlighted strong recurring revenue growth and efficiency initiatives, leading to an updated full-year adjusted diluted EPS guidance, reflecting a 10% growth at the midpoint. Despite a decline in issuance, Moody’s Investors Service maintained its revenue through favorable revenue mix and growth in structured finance and public finance sectors.

Executive/Board ChangesBusiness Operations and Strategy
Moody’s Expands Board with New Director Appointment
Positive
Jul 16, 2025

On July 16, 2025, Moody’s Corporation announced the election of Sumit Dhawan to its Board of Directors, expanding the board from nine to ten members. Mr. Dhawan, who has extensive experience in cybersecurity and cloud computing, will also serve on the Governance & Nominating and Compensation & Human Resources Committees. His appointment is expected to bring valuable insights and strategic vision to Moody’s, enhancing its ability to meet evolving customer needs.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025