Moody’s (NYSE:MCO) Posts Earnings Results, Misses Expectations By $0.11 EPS

Moody’s (NYSE:MCO) posted its quarterly earnings results on Wednesday. The business services provider reported $4.14 earnings per share for the quarter, missing the consensus estimate of $4.25 by ($0.11), FiscalAI reports. Moody’s had a return on equity of 80.35% and a net margin of 34.25%. The company had revenue of $2.02 billion during the quarter, compared to analysts’ expectations of $2.08 billion. During the same quarter in the previous year, the company earned $3.92 EPS. The business’s quarterly revenue was up .8% on a year-over-year basis.

Here are the key takeaways from Moody’s’ conference call:

• Strong third-quarter profitability: Moody’s generated more than $2 billion in revenue for the third consecutive quarter, with adjusted operating margin of 52.6% and adjusted diluted EPS growth of 6% despite a 2% decline in rated issuance.
• Moody’s Analytics ARR increased approximately 8%, supported by 95% retention and growth in KYC, insurance, lending, private markets, and AI-enabled solutions. MA expanded its adjusted operating margin by 100 basis points to 35.3%.
• Management cited strong structural demand from AI infrastructure, data centers, power investment, and refinancing needs; first-time rating mandates rose 40% year over year to the highest quarterly level in five years, prompting an increase in the full-year outlook to 900–950 mandates.
• Ratings performance varied significantly by asset class: investment-grade issuance rose 16% and AI-related infrastructure financing remained strong, while high-yield revenue fell 40% and bank-loan revenue declined 27% amid softer leveraged-finance activity.
• Moody’s reaffirmed full-year guidance for high-single-digit revenue growth, a 52%–53% adjusted operating margin, and adjusted diluted EPS of $16.50–$17.00. The company also expects up to $3 billion in share repurchases and has returned more than 130% of free cash flow to shareholders year to date.

Moody’s Stock Performance

Shares of MCO opened at $480.40 on Thursday. The firm has a market capitalization of $83.20 billion, a P/E ratio of 30.46, a PEG ratio of 2.45 and a beta of 1.35. The company has a debt-to-equity ratio of 2.01, a current ratio of 1.19 and a quick ratio of 1.19. Moody’s has a one year low of $402.28 and a one year high of $546.88. The business has a fifty day moving average of $478.05 and a 200 day moving average of $467.75.

Moody’s Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, December 11th. Investors of record on Friday, November 20th will be issued a $1.03 dividend. The ex-dividend date of this dividend is Friday, November 20th. This represents a $4.12 annualized dividend and a dividend yield of 0.9%. Moody’s’s payout ratio is presently 26.13%.

Insiders Place Their Bets

In other Moody’s news, CEO Robert Fauber sold 1,467 shares of the business’s stock in a transaction dated Monday, August 3rd. The stock was sold at an average price of $484.30, for a total transaction of $710,468.10. Following the completion of the sale, the chief executive officer directly owned 51,964 shares in the company, valued at $25,166,165.20. The trade was a 2.75% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 0.14% of the company’s stock.

More Moody’s News

Here are the key news stories impacting Moody’s this week:

• Positive Sentiment: AI infrastructure issuance increased fourfold year over year in the third quarter, and refinancing needs across the U.S. and Europe, the Middle East and Africa exceed $5 trillion. These trends could support future debt-rating and data-services demand. Moody’s: 3 Key Takeaways for Long-Term Investors
• Positive Sentiment: Moody’s declared a quarterly dividend of $1.03 per share, or $4.12 annualized, payable December 11 to shareholders of record November 20. The dividend yield is approximately 0.9%, providing a modest shareholder-return benefit.
• Positive Sentiment: Third-quarter adjusted earnings rose to $4.14 per share from $3.92 a year earlier, while demand for analytics remained steady. The company also maintains strong profitability, including a reported 34.25% net margin and 80.35% return on equity. MCO Q3 Earnings Miss Estimates as Costs Rise & MIS Revenues Fall
• Neutral Sentiment: Moody’s Ratings raised OYO parent PRISM’s outlook to positive, citing expected EBITDA growth. The development may support Moody’s credit-rating activity, but its direct effect on MCO is likely limited. OYO-parent PRISM IPO Article
• Negative Sentiment: Third-quarter adjusted EPS of $4.14 missed the $4.25 consensus estimate, and revenue of $2.02 billion fell short of the $2.08 billion forecast. Revenue increased only 0.8% year over year, while rising costs and weaker MIS revenue added to concerns about near-term growth. Moody’s Misses Q3 Earnings and Revenue Estimates
• Negative Sentiment: One valuation analysis argues that MCO’s exceptional business quality is already reflected in its approximately 30-times P/E ratio, making the stock vulnerable to further weakness if growth does not accelerate. Moody’s Valuation Analysis

Analyst Upgrades and Downgrades

MCO has been the topic of several analyst reports. Jefferies Financial Group downgraded Moody’s to a “neutral” rating and set a $560.00 target price on the stock. in a report on Friday, October 16th. Rothschild & Co Redburn lifted their price target on Moody’s from $510.00 to $520.00 and gave the stock a “neutral” rating in a research report on Thursday, July 23rd. The Goldman Sachs Group upped their price target on shares of Moody’s from $557.00 to $593.00 and gave the stock a “buy” rating in a research note on Thursday, July 23rd. JPMorgan Chase & Co. cut their price objective on shares of Moody’s from $570.00 to $555.00 and set an “overweight” rating on the stock in a research report on Wednesday, October 14th. Finally, Stifel Nicolaus cut their price objective on shares of Moody’s from $550.00 to $537.00 and set a “buy” rating on the stock in a research report on Thursday. Thirteen equities research analysts have rated the stock with a Buy rating and seven have assigned a Hold rating to the company’s stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average target price of $550.47.

About Moody’s

Moody’s Corporation (NYSE:MCO) is a global provider of credit ratings, research, data, analytics and risk-management solutions. Through Moody’s Investors Service, the company assigns credit ratings and publishes research on corporate, government and structured-finance debt issuers, helping investors and other market participants evaluate credit risk.

Through Moody’s Analytics, the company provides financial intelligence, economic research, data, software and advisory services. Its offerings support credit analysis, lending, portfolio management, enterprise risk management, compliance and related functions across financial institutions, corporations, governments and other organizations.

Moody’s traces its origins to 1909, when John Moody established the company that introduced published credit ratings for bonds.