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].

Core Viewpoint - Moody's Corporation (NYSE: MCO) is recommended as a buy due to its strong competitive moat and pricing power, indicating a positive outlook for both of its business segments [1]. Group 1: Investment Thesis - The investment approach focuses on understanding core business economics, including competitive moat, unit economics, reinvestment opportunities, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1]. - The analyst emphasizes a fundamental, valuation-driven investment strategy, particularly in sectors with strong secular tailwinds [1]. Group 2: Analyst Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds, which were seeded from friends and family [1]. - The motivation for sharing insights on Seeking Alpha is to provide valuable investment analysis and receive feedback from other investors [1].

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]

Core Viewpoint - Moody's reported strong fourth-quarter 2024 results and provided an optimistic outlook for 2025, with shares reaching an all-time high of $531.93 following the announcement [1][2]. Financial Performance - Fourth-quarter adjusted earnings were $2.62 per share, exceeding the Zacks Consensus Estimate of $2.60 and reflecting a 20% increase from the previous year [1]. - For 2025, Moody's projects adjusted earnings between $14.00 and $14.50 per share, up from $12.47 in 2024 [2][5]. - Revenues are expected to grow in the high-single-digit percent range, while operating expenses are anticipated to rise in the low-to-mid-single-digit percent range [4]. Strategic Initiatives - Moody's is pursuing inorganic growth through acquisitions, including CAPE Analytics, Numerated Growth Technologies, and Praedicat, aimed at expanding beyond core credit ratings [6][8]. - A strategic alliance with MSCI was established to enhance ESG solutions, and a 100% stake in GCR was acquired to strengthen its position in Africa's credit market [7][8]. Balance Sheet and Liquidity - As of December 31, 2024, Moody's had total debt of $6.73 billion, an undrawn revolving credit facility of $1.25 billion, and cash and short-term investments totaling $2.97 billion [10]. - The company expects cash flow from operations of $2.75-$2.95 billion and free cash flow of $2.40-$2.60 billion for 2025 [10]. Capital Distribution - Moody's announced an 11% increase in its quarterly dividend to 94 cents per share and has increased its dividend six times in the past five years [11]. - An additional $1.5 billion in share repurchase authority was announced, with nearly $1.6 billion worth of shares available as of December 31, 2024 [12]. Market Position and Competition - Moody's faces competition from firms like Fitch, S&P Global, and Dun & Bradstreet in the credit rating and analytics sectors [14][15]. - The company has been experiencing rising operating expenses, with a five-year CAGR of 7.1% due to increased selling, general, and administrative costs [13]. Analyst Expectations - Earnings estimates for Moody's have been revised upward for both 2025 and 2026, indicating positive sentiment [16]. - The estimate for 2025 suggests an 8.1% year-over-year growth, while the estimate for 2026 indicates a 13.7% rise [18]. Investment Outlook - The operating environment is improving, with expected increases in issuance volumes and demand for corporate refinancing, supporting profitability [20]. - Despite challenges from elevated expenses and competition, Moody's strong liquidity and capital distribution position it well for sustained growth [21].

Company Overview - Moody's Analytics (MA) serves over 14,800 customers across more than 165 countries, including 6,700 corporates and professional services[32]. - Moody's Investors Service (MIS) has rated over $75.8 trillion in total debt outstanding, covering 33,300 rated organizations and structured deals[38]. - The company employs approximately 16,000 people across more than 40 countries, emphasizing its global presence and diverse workforce[22]. Revenue Generation - MA's revenue is driven by subscription-based services, with a focus on data, analytics, and cloud-based software tools for risk management[27]. - MIS generates revenue from non-ratings-related operations, including financial instruments pricing services and Second Party Opinions, although these are not material to the segment's results[39]. Operational Efficiency and Growth - The company aims to enhance operational efficiency through a multi-year restructuring program initiated in December 2024, focusing on high-priority growth areas[20]. - Moody's expects continued growth in global fixed-income market activity, driven by increasing financial complexity and the demand for integrated risk solutions[64]. - The company has a strong position in the credit ratings market, recognized for the depth and breadth of its analytical capabilities[36]. Sustainability and Corporate Responsibility - Moody's received multiple awards for its sustainability efforts in 2024, reflecting its commitment to integrating sustainability into its operations and services[41]. - Moody's focuses on delivering value to stakeholders while managing risks related to sustainability and climate change[41]. - Moody's was recognized on CDP's 2023 Climate Change 'A' List for its leadership in corporate transparency and actions taken in response to climate change[42]. - The company aims to procure 100% renewable electricity in its office spaces as part of its decarbonization strategy, with implementation costs expected to be non-material[55]. Employee Growth and Talent Management - Moody's total employee count increased by 4% from 7,864 in 2023 to 8,145 in 2024, with a notable 6% growth in non-U.S. employees[53]. - The company achieved a 7% increase in its MIS segment's total employees, rising from 5,360 in 2023 to 5,757 in 2024[53]. - The company has implemented a global paid parental leave policy and updated its tuition reimbursement program to attract and retain top talent[44]. Technology and Innovation - The company is leveraging AI and ML technologies to enhance customer service and decision-making capabilities, positioning itself as an early adopter of Gen AI[65]. - Moody's has expanded its climate data and analysis capabilities through the acquisition of RMS, integrating these into existing offerings[56]. Regulatory Environment - The European Parliament reached an agreement on the Regulation on ESG Ratings Activities, which will become law after an 18-month implementation period, potentially impacting certain products offered by the company[83]. - The EU AI Act was published in July 2024, with varying implementation periods, and the company is assessing its implications[84]. - The EU adopted DORA in December 2022, which will apply from early 2025, requiring the company to enhance its IT oversight and risk management[85]. - In March 2023, the FCA initiated a review of competition in the wholesale market data, concluding without specific remedies for credit ratings data[86]. - The U.K. Government intends to introduce regulation for ESG ratings providers in 2025, following a consultation published in March 2023[87]. Intellectual Property - The company owns a variety of intellectual property, including proprietary information, databases, and software tools, which are crucial to its business[88]. - The company provides access to its databases and software applications under standard agreements that include intellectual property protections[92]. - The company does not rely on any single data source for a material aspect of its business, utilizing a variety of commercial sources[93]. - The company considers its intellectual property proprietary and employs various safeguards for its protection[95]. - The company maintains an investor relations website where it provides access to its SEC filings and other financial information[96].

Financial Data and Key Metrics Changes - Moody's Corporation reported a record revenue growth of 20% in 2024, exceeding $7 billion, with a 26% increase in adjusted diluted EPS [9][37] - The adjusted operating margin expanded by over 400 basis points, reaching 50% for 2025 guidance [9][47] Business Line Data and Key Metrics Changes - Moody's Investors Service (MIS) achieved an 18% total revenue growth, with a remarkable 29% growth in transactional revenue in Q4 [10][38] - Moody's Analytics (MA) reported a 10% recurring revenue growth in Q4 and a 9% growth in Annual Recurring Revenue (ARR) [11][40] - Decision Solutions within MA led with $1.4 billion in ARR, growing at 12% [11][41] Market Data and Key Metrics Changes - MIS revenue in Q4 was $809 million, up 18% year-on-year, driven by a 134% increase in leveraged loan issuance activity [38][39] - MA's recurring revenue, which constitutes 95% of total revenue, grew by 10% year-on-year [40] Company Strategy and Development Direction - The company is focusing on strategic investments in technology, including generative AI and enhancing risk and resilience capabilities [13][60] - Moody's aims to simplify its organizational structure and improve operational efficiency through an efficiency program, expecting annualized cost savings of $250 million to $300 million [52][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand across various sectors, particularly in private credit and sustainable finance [15][119] - The company anticipates a constructive market environment for 2025, with expectations of low single-digit growth in rated issuance [49][84] Other Important Information - Moody's was recognized as the best rating agency for the thirteenth consecutive year, reinforcing its leadership position in the market [14] - The company plans to incur restructuring charges of $200 to $250 million over two years to support its efficiency program [53] Q&A Session Summary Question: Clarification on medium-term guidance and organic growth - Management confirmed that the medium-term targets primarily reflect organic growth, with less reliance on M&A than initially anticipated [64][67] Question: Insights on MIS margins and earnings growth - Management indicated that while MIS margins are already high, they expect continued investments to enhance efficiency and support long-term growth [69][72] Question: Discussion on MA margins and investment strategies - Management clarified that they are redeploying capital towards high-growth areas while maintaining investments in their platform and data estate [75][76] Question: Outlook for ratings and potential risks - Management highlighted economic growth and refinancing activity as key drivers for ratings, with a cautious outlook on M&A activity [84][86] Question: Update on demand environment and sales cycles - Management reported stable sales cycles and strong new business production, with retention rates slightly improving [90][92] Question: Revenue growth expectations despite ARR growth - Management explained that the difference is driven by transactional revenue dynamics, which are expected to narrow over time [94][96] Question: Impact of federal government exposure and policy changes - Management noted that federal government exposure is minimal, constituting less than 1% of consolidated revenue, with potential impacts from policy changes being sector-specific [106][110] Question: Medium-term outlook for MIS revenue growth - Management indicated that the updated medium-term outlook reflects strong performance and anticipated recovery in M&A activity and private credit [112][119]

Core Insights - Moody's reported fourth-quarter 2024 adjusted earnings of $2.62 per share, exceeding the Zacks Consensus Estimate of $2.60, with a 20% increase from the previous year [1][3] - The company's revenues for the quarter were $1.67 billion, a 13% year-over-year increase, although it fell short of the consensus estimate of $1.70 billion [4] - Moody's expects adjusted earnings for 2025 to be in the range of $14.00-$14.50 per share, with projected revenue growth in the high-single-digit percent range [9] Financial Performance - Net income attributable to Moody's for the fourth quarter was $395 million or $2.17 per share, up from $340 million or $1.85 per share in the prior-year quarter [3] - For the full year 2024, adjusted earnings were $12.47 per share, beating the consensus estimate of $12.39, and grew 26% year over year [3] - Total revenues for 2024 reached $7.09 billion, a 20% increase, but missed the consensus estimate of $7.11 billion [4] Segment Performance - Moody's Investors Service revenues increased 18% year over year to $809 million, driven by strong Corporate Finance and Structured Finance performance [5] - Moody's Analytics revenues grew 8% to $863 million, supported by robust demand for proprietary data and analytical insights [5] Balance Sheet and Liquidity - As of December 31, 2024, Moody's had total cash and short-term investments of $2.97 billion, up from $2.19 billion a year earlier [6] - The company reported $6.73 billion in outstanding debt and $1.25 billion in additional borrowing capacity under its revolving credit facility [6] Share Repurchase Program - During the quarter, Moody's repurchased 1 million shares at an average price of $477.15, with approximately $1.6 billion of share repurchase authorization remaining available as of December 31, 2024 [7] 2025 Guidance - Moody's anticipates operating expenses to rise in the low-to-mid-single-digit percent range and expects $80 million to $100 million in restructuring charges related to its Strategic and Operational Efficiency Restructuring Program [10]