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].

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].