Moody's (MCO) reported first-quarter 2025 adjusted earnings of $3.83 per share, which outpaced the Zacks Consensus Estimate of $3.56. The bottom line grew 14% from the year-ago quarter figure.Shares of MCO lost 1% in pre-market trading as it lowered the 2025 guidance on “market volatility.” Robust global bond issuance volumes and steady demand for analytics supported Moody’s results. The company’s liquidity position was strong during the quarter. However, an increase in operating expenses posed a headwind.A ...

Core Insights - Moody's reported quarterly earnings of $3.83 per share, exceeding the Zacks Consensus Estimate of $3.56 per share, and up from $3.37 per share a year ago, representing an earnings surprise of 7.58% [1] - The company achieved revenues of $1.92 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.29%, compared to $1.79 billion in the same quarter last year [2] - Moody's shares have declined approximately 12.7% year-to-date, slightly underperforming the S&P 500's decline of 12.3% [3] Earnings Outlook - The future performance of Moody's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $3.60, with expected revenues of $1.89 billion, and for the current fiscal year, the EPS estimate is $13.77 on revenues of $7.46 billion [7] Industry Context - The Financial - Miscellaneous Services industry, to which Moody's belongs, is currently ranked in the top 30% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Moody's Corporation reported Q1 2025 revenue of $1.9 billion, an 8% increase year-on-year[1]. - Moody's Analytics revenue was $859 million, also up 8% year-on-year, while Moody's Investors Service revenue reached $1.1 billion, reflecting the same growth rate[1]. - Revenue for Q1 2025 was $1,924 million, a 7.7% increase from $1,786 million in Q1 2024[44]. - Operating income increased to $846 million in Q1 2025, up from $801 million in Q1 2024, reflecting a growth of 5.6%[44]. - Net income attributable to Moody's rose to $625 million in Q1 2025, compared to $577 million in Q1 2024, marking an 8.3% increase[44]. - Basic earnings per share increased to $3.47 in Q1 2025, up from $3.16 in Q1 2024, representing a 9.8% growth[44]. - Adjusted Operating Income for Q1 2025 was $994 million, up from $906 million in Q1 2024, reflecting a growth of 9.7%[60]. - Adjusted Diluted EPS for Q1 2025 was $3.83, a 14% increase compared to the prior year, with full year 2025 guidance set between $13.25 to $14.00[3]. - Adjusted Net Income for the three months ended March 31, 2025, was $692 million, up from $618 million in 2024[74]. - Diluted EPS attributable to Moody's common shareholders increased to $3.46 for Q1 2025, compared to $3.15 in Q1 2024[74]. Revenue Growth - Annualized Recurring Revenue (ARR) increased by $260 million to $3.3 billion, representing a 9% growth year-on-year[13]. - Organic constant currency revenue growth for the Company was 8% for Q1 2025, with MA revenue growing by 7% and MIS revenue by 8%[66]. - Total external revenue in the MA segment was $859 million for Q1 2025, compared to $799 million in Q1 2024, marking an increase of 7.5%[54]. - The MA segment's recurring revenue increased by $70 million, reaching $822 million in Q1 2025, a growth of 9% year-over-year[66]. - Total MA ARR for the Company increased to $3,266 million for the year ended March 31, 2025, up from $3,006 million in 2024, representing a growth of 9%[71]. - The Banking segment's ARR rose to $453 million, an increase of $32 million or 8% compared to the previous year[71]. Expenses and Cash Flow - Operating expenses grew 9% year-on-year, including 3% from investments and operational costs, and 2% related to M&A[20]. - Cash flow from operations was $757 million, while free cash flow was $672 million, impacted by higher incentive compensation payments[34]. - Free Cash Flow for the three months ended March 31, 2025, was $672 million, slightly down from $697 million in the same period of 2024[63]. - The Company’s net cash provided by operating activities was $757 million for Q1 2025, down from $775 million in Q1 2024[63]. - The company repaid $700 million in notes during Q1 2025, impacting cash flows from financing activities[47]. Assets and Liabilities - Total assets decreased to $15,096 million as of March 31, 2025, down from $15,505 million at the end of 2024[46]. - Total liabilities decreased to $11,238 million as of March 31, 2025, compared to $11,778 million at the end of 2024[46]. - Cash and cash equivalents at the end of Q1 2025 were $2,139 million, down from $2,408 million at the beginning of the period[47]. - Goodwill increased to $6,237 million as of March 31, 2025, up from $5,994 million at the end of 2024, indicating potential acquisitions or growth in value[46]. Future Outlook - Moody's updated its full year 2025 U.S. GDP growth forecast to 0.0% - 1.0%, down from the previous 1.5% - 2.5%[37]. - Moody's expects a decline in global MIS rated issuance in the low-single-digit to high single-digit percent range for 2025[37]. - The Company projects a revenue increase in the mid-single-digit percent range for full year 2025, down from the previously expected high-single-digit percent range[77]. - Adjusted Diluted EPS guidance for 2025 is now set at $13.25 to $14.00, revised from the previous guidance of $14.00 to $14.50[77]. - Operating cash flow guidance for 2025 is projected to be between $2.65 billion and $2.85 billion[79]. - The effective tax rate is expected to remain between 23% to 25% for 2025[77]. - Moody's Analytics (MA) ARR is anticipated to increase in the high-single-digit to low-double-digit percent range for 2025[77]. - The Company plans to allocate at least $1.3 billion for share repurchases, subject to market conditions and other capital allocation decisions[77].

Core Viewpoint - Moody's is expected to report first-quarter 2025 results on April 22, with mixed revenue growth anticipated across its divisions due to various market conditions and strategic efforts. Group 1: Revenue Estimates - The Corporate Finance line is projected to generate revenues of $532.3 million, indicating a marginal rise from the previous year's quarter [2] - The Financial Institutions business line is estimated to bring in $201.1 million, reflecting a 3.1% increase [3] - Public, Project, and Infrastructure Finance revenues are expected to be around $141.2 million, suggesting a slight increase [3] - Structured Finance revenues are anticipated to reach $116.8 million, indicating a 2.5% rise [4] - Overall revenues for the Moody's Investors Service division are estimated at $1.1 billion, implying a 7.3% year-over-year increase [5] Group 2: Moody's Analytics Division - Revenues from the Moody's Analytics division are expected to rise to $868.4 million, representing an 8.7% increase from the prior year [7] - The division's growth is supported by rising demand for analytics and strategic inorganic growth efforts [6] Group 3: Earnings Expectations - The consensus estimate for earnings is $3.57, reflecting a 5.9% increase from the year-ago figure [9] - Sales are projected to be $1.89 billion, suggesting a growth of 5.7% [9] - The likelihood of Moody's beating the earnings estimate is low, with an Earnings ESP of -0.38% and a Zacks Rank of 3 [8]

Core Viewpoint - Analysts forecast Moody's (MCO) will report quarterly earnings of $3.57 per share, reflecting a year-over-year increase of 5.9%, with revenues expected to reach $1.89 billion, up 5.7% from the previous year [1]. Earnings Estimates - Over the past 30 days, the consensus EPS estimate has been adjusted upward by 0.8%, indicating a reassessment by covering analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong relationship between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts predict 'Revenue- Total external customers- Moody's Analytics' at $864.70 million, a year-over-year increase of 8.2% [5]. - 'Revenue- Total external customers- Moody's investor services' is expected to be $1.02 billion, reflecting a 3.5% increase year-over-year [5]. - 'Revenue- Moody's Analytics- Data and Information' is projected to reach $223.22 million, indicating a 5.3% year-over-year change [5]. - 'Revenue- Moody's investor services (MIS) - Intersegment revenue' is estimated at $49.20 million, showing a 4.7% increase from the prior year [6]. - 'Revenue- Moody's Analytics- Research and Insights' is expected to be $237.95 million, a 7.2% increase year-over-year [7]. - 'Revenue- Moody's investor services' is forecasted to reach $1.06 billion, reflecting a 7.3% year-over-year change [7]. - 'Revenue- Moody's Analytics- Decision Solutions' is projected at $404.32 million, indicating a 10.8% increase from the previous year [8]. - 'Revenue- Moody's investor services- Public, project and infrastructure finance' is expected to be $141.20 million, a slight increase of 0.1% year-over-year [9]. - The consensus estimate for 'Revenue- Moody's investor services- Structured finance' stands at $116.83 million, reflecting a 2.5% increase from the prior year [10]. Stock Performance - Moody's shares have decreased by 3.3% in the past month, compared to a 4.2% decline in the Zacks S&P 500 composite [10].

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Moody's, with a focus on how actual results compare to estimates, which could significantly impact stock price [1][2]. Earnings Expectations - Moody's is expected to report earnings of $3.57 per share, reflecting a +5.9% year-over-year change, with revenues projected at $1.89 billion, up 5.7% from the previous year [3]. - The earnings report is scheduled for April 22, 2025, and could lead to stock price movements depending on whether the results exceed or fall short of expectations [2]. Estimate Revisions - The consensus EPS estimate has been revised 0.84% higher in the last 30 days, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Moody's is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.38%, suggesting a bearish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, with a positive ESP being a strong indicator of an earnings beat [6][8]. - Moody's current Zacks Rank is 2 (Buy), but the negative Earnings ESP complicates predictions of an earnings beat [11]. Historical Performance - Moody's has consistently beaten consensus EPS estimates in the last four quarters, with a recent surprise of +0.77% when it reported earnings of $2.62 per share against an expectation of $2.60 [12][13]. Industry Comparison - American Express, another player in the financial services sector, is expected to report earnings of $3.46 per share, a +3.9% year-over-year change, with revenues projected at $17 billion, up 7.6% [17]. - The consensus EPS estimate for American Express has been revised 0.2% lower, resulting in an Earnings ESP of -0.05%, making it difficult to predict an earnings beat [18].

I recommend a buy rating for Moody's Corporation (NYSE: MCO ). In my view, MCO is one of the businesses that has the best moat in the market, with strong pricing power. I have a positive outlook for both segments, and I'm a fundamental, valuation-driven investor with a strong focus on identifying businesses that have the potential to scale over time and unlock massive terminal value. My investment approach centers around understanding the core economics of a business—its competitive moat, unit economics, re ...

Company Overview - Moody's shares ended the last trading session 10.6% higher at $438.59, following a significant volume of trading, contrasting with a 10.6% loss over the past four weeks [1] - The stock's rally was positively influenced by President Trump's announcement of a 90-day tariff suspension for non-retaliating countries, which alleviated trade tensions and boosted investor sentiment [2] Earnings Expectations - Moody's is expected to report quarterly earnings of $3.56 per share, reflecting a year-over-year increase of 5.6% [2] - Revenue expectations stand at $1.89 billion, which is a 5.9% increase from the same quarter last year [2] Earnings Estimate Revisions - The consensus EPS estimate for Moody's has been revised 0.8% higher over the last 30 days, indicating a positive trend that typically correlates with price appreciation [4] - Empirical research suggests that trends in earnings estimate revisions are strongly correlated with near-term stock price movements [3] Industry Comparison - Moody's holds a Zacks Rank of 2 (Buy) within the Zacks Financial - Miscellaneous Services industry [4] - Another company in the same industry, ChoiceOne Financial Services, Inc. (COFS), closed the last trading session 3.5% higher at $26.55, but has returned -11.8% over the past month [4]

Core Insights - The financial industry is undergoing a transformation due to Big Data and AI, enabling faster and smarter decision-making for investors and institutions [2][4] - The global Big Data market is projected to reach $401.2 billion by 2028, indicating significant growth potential across various sectors [4] Group 1: Technology Utilization - Banks and financial institutions are leveraging Big Data and AI to enhance customer understanding, improve marketing strategies, and detect fraud in real-time [3][4] - Companies like NVIDIA are at the forefront of the Big Data revolution, providing advanced chips and software tools that facilitate AI applications across multiple industries [5][9] Group 2: Company-Specific Developments - NVIDIA has evolved from a graphics card manufacturer to a leader in AI and Big Data, with its Blackwell technology enabling faster and more cost-effective AI model training [8][10] - Moody's Corporation has shifted from traditional ratings to risk analytics, utilizing Big Data and AI to enhance its services and improve client risk management [12][13] - Qualcomm has expanded its role in the AI space, with its Snapdragon processors powering smart devices and enabling advanced AI features without internet connectivity [14][15]

Core Insights - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals and holding them long-term [1] - The investment strategy focuses on maintaining a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] - The company plans to publish articles on selected companies approximately three times a week, with regular quarterly updates [1] Investment Strategy - The investment approach involves rating companies as 'Hold' when their growth opportunities do not meet the threshold or when downside risks are deemed too high [1] - The company is managed by an MBA graduate with a law degree, currently working as a financial analyst at a large pension fund [1] Analyst's Position - The analyst has a beneficial long position in the shares of SPGI, indicating confidence in the stock's performance [2]