Moody's (MCO) AI Stock Analysis

• Market Cap: $86.72B
• Dividend Yield: 0.74%
• Average Volume (3M): 642.91K
• Price to Earnings (P/E): 41.6
• Beta (1Y): 1.20
• Revenue Growth: 15.95%
• EPS Growth: 26.38%
• Country: US
• Employees: 15,795
• Sector: Financial
• Sector Strength: 81
• Industry: Financial - Data & Stock Exchanges
• EPS (TTM): 3.83
• Shares Outstanding: 179,900,000
• 10 Day Avg. Volume: 573,759
• 30 Day Avg. Volume: 642,907
• PEG Ratio: 14.59
• Price to Book (P/B): 22.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 33.72
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $506.36
• Price Target Upside: 3.86% 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.

Private Credit Market

The company is well-positioned in private credit with continued growth and margin expansion across the enterprise.

Tech Innovation

MCO's tech innovation journey is progressing well, with strong reception for Research Assistant.

Negative Factors

Client Purchasing Patterns

Moody's Analytics business is experiencing issues as clients tighten purchasing patterns.

Issuance Guidance

Management lowered 2025 issuance guidance due to slowness observed, reflecting a more cautious outlook for the year.

Macroeconomic Environment

There is a risk that clients delay decision-making due to recent macro uncertainty and market volatility.

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
	EBIT
2.94B	2.88B	2.14B	1.88B	2.84B	2.39B
	EBITDA
2.91B	3.33B	2.61B	2.33B	3.09B	2.66B
	Net Income Common Stockholders
2.11B	2.06B	1.61B	1.37B	2.21B	1.78B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.20B	2.97B	2.19B	1.86B	1.90B	2.70B
	Total Assets
15.10B	15.51B	14.62B	14.35B	14.68B	12.41B
	Total Debt
7.14B	7.75B	7.42B	474.00M	560.00M	521.00M
	Net Debt
5.00B	5.34B	5.29B	-1.29B	-1.25B	-2.08B
	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: 487.54
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

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 487.54 is above the 20-day moving average (MA) of 480.64, above the 50-day MA of 457.00, and above the 200-day MA of 472.71, indicating a bullish trend. The MACD of 6.91 indicates Positive momentum. The RSI at 61.46 is Neutral, neither overbought nor oversold. The STOCH value of 84.75 is Negative, 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	76 Outperform	$157.12B	40.22	11.68%	0.73%	12.98%	42.72%
MCO	75 Outperform	$86.72B	41.65	57.90%	0.74%	15.95%	26.38%
MORN	75 Outperform	$13.10B	34.43	25.68%	0.55%	10.11%	79.71%
MSCI	71 Outperform	$43.82B	38.95	-117.99%	1.20%	11.67%	-0.89%
FDS	70 Outperform	$16.49B	30.88	28.12%	0.97%	4.66%	11.15%
Sector *	64 Neutral	$12.77B	9.77	7.59%	16985.66%	12.31%	-7.69%
DNB	57 Neutral	$4.03B	―	-0.64%	2.21%	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.

Moody’s Announces New Chief Accounting Officer

On March 11, 2025, Moody’s Corporation announced that Caroline Sullivan, the Chief Accounting Officer and Corporate Controller, will depart from her position on April 1, 2025. Jason Phillips, who has been with the company since 2003 and has held various significant roles, will succeed her. This transition is expected to maintain stability in the company’s accounting operations, given Mr. Phillips’ extensive experience and involvement in key financial reporting and policy teams.