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

Moody’s (NYSE:MCO) issued its quarterly earnings data on Wednesday. The business services provider reported $4.14 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $4.25 by ($0.11), FiscalAI reports. Moody’s had a return on equity of 84.76% and a net margin of 35.26%. The business had revenue of $2.02 billion during the quarter, compared to analysts’ expectations of $2.08 billion. During the same quarter last year, the business posted $3.92 EPS. The company’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 Price Performance

Shares of Moody’s stock opened at $487.42 on Friday. Moody’s has a 52-week low of $402.28 and a 52-week high of $546.88. The stock has a market capitalization of $84.42 billion, a price-to-earnings ratio of 30.91, a price-to-earnings-growth ratio of 2.50 and a beta of 1.35. The company has a fifty day moving average of $478.07 and a 200-day moving average of $468.09. The company has a debt-to-equity ratio of 1.86, a quick ratio of 1.19 and a current ratio of 1.29.

Moody’s Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Friday, December 11th. Stockholders of record on Friday, November 20th will be paid a $1.03 dividend. The ex-dividend date of this dividend is Friday, November 20th. This represents a $4.12 dividend on an annualized basis and a dividend yield of 0.8%. Moody’s’s dividend payout ratio is 26.13%.

Insider Activity at Moody’s

In other Moody’s news, CEO Robert Fauber sold 1,467 shares of the business’s stock in a transaction on Monday, August 3rd. The shares were sold at an average price of $484.30, for a total value of $710,468.10. Following the completion of the sale, the chief executive officer directly owned 51,964 shares of the company’s stock, valued at $25,166,165.20. The trade was a 2.75% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at the SEC website. 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: Moody’s reported that AI infrastructure issuance increased fourfold from the prior year, while refinancing needs across the U.S. and Europe exceed $5 trillion. These trends could support future growth in credit ratings and analytics. Moody’s: 3 Key Takeaways for Long-Term Investors
• Positive Sentiment: The company’s third-quarter outlook was described as slightly raised, with analytics demand helping drive year-over-year growth despite weakness in some Moody’s Investors Service revenue areas. MCO Q3 Deep Dive
• Positive Sentiment: Deutsche Bank maintained its Buy rating and raised its price target to $561 from $559. Bank of America also retained a Buy rating with a $575 target, implying substantial upside from the reference price. Deutsche Bank Price Target
• Positive Sentiment: Moody’s declared a quarterly dividend of $1.03 per share, equal to $4.12 annually and an indicated yield of approximately 0.8%. Moody’s Dividend Information
• Neutral Sentiment: Several analysts adjusted targets without changing their positive ratings: Stifel lowered its target to $537 from $550, while Morgan Stanley raised its target to $480 from $470. The changes show continued confidence in the business but also differing views on valuation and near-term upside. Morgan Stanley Price Target
• Negative Sentiment: Third-quarter adjusted earnings per share came in at $4.14 versus the $4.25 consensus estimate, while revenue of $2.02 billion missed expectations of $2.08 billion. Revenue still increased 0.8% year over year, but the shortfall likely weighs on the shares. Moody’s Misses Q3 Revenue Estimates
• Negative Sentiment: Higher costs and falling Moody’s Investors Service revenue contributed to the earnings miss, raising concerns about operating leverage and the pace of ratings-market recovery. MCO Q3 Earnings Miss Estimates
• Negative Sentiment: At roughly 31 times earnings, commentary from Seeking Alpha argues that Moody’s valuation is demanding, limiting room for disappointment even though the company remains high quality. Moody’s Q3 Earnings and Valuation

Analyst Ratings Changes

MCO has been the topic of several recent analyst reports. Jefferies Financial Group cut Moody’s to a “neutral” rating and set a $560.00 price target on the stock. in a report on Friday, October 16th. Wells Fargo & Company cut their price objective on Moody’s from $597.00 to $595.00 and set an “overweight” rating for the company in a report on Thursday. Royal Bank Of Canada decreased their price objective on shares of Moody’s from $610.00 to $575.00 and set an “outperform” rating on the stock in a research report on Friday, October 16th. Evercore raised their target price on shares of Moody’s from $570.00 to $588.00 and gave the company an “outperform” rating in a research note on Wednesday, July 15th. Finally, Robert W. Baird lifted their target price on shares of Moody’s from $557.00 to $572.00 and gave the company an “outperform” rating in a research report on Thursday, July 23rd. Thirteen analysts have rated the stock with a Buy rating and seven have given a Hold rating to the stock. According to MarketBeat.com, the stock currently has an average rating of “Moderate Buy” and a consensus target price of $552.63.

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.