Moody's (MCO) Up 6.2% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Moody's reported mixed financial results for Q4 2023, with adjusted earnings per share of $2.19, missing estimates, but showing a 37% year-over-year increase. The company experienced growth in revenues and maintained a strong liquidity position, although it missed revenue estimates slightly [2][3]. Financial Performance - Adjusted earnings for Q4 2023 were $2.19 per share, below the Zacks Consensus Estimate of $2.34, but up 37% from the previous year [2] - Total revenues for Q4 2023 were $1.48 billion, missing the consensus estimate of $1.49 billion, but reflecting a 15% year-over-year growth [3] - For the full year 2023, adjusted earnings were $9.90 per share, missing estimates but growing 16% year-over-year, while total revenues increased by 8% to $5.92 billion [2][3] Segment Performance - Moody's Investors Service revenues grew 19% year-over-year to $684 million, driven by strong Corporate Finance and improvements in Structured Finance [4] - Moody's Analytics revenues increased 11% to $796 million, supported by double-digit growth across all business lines [4] Balance Sheet and Cash Flow - As of December 31, 2023, Moody's had total cash and short-term investments of $2.19 billion, up from $1.86 billion a year earlier [5] - The company had $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity [5] Share Repurchase and Guidance - Moody's repurchased 0.6 million shares at an average price of $346.8 during the quarter [6] - For 2024, the company expects adjusted earnings in the range of $10.25-$11.00 per share and projects revenue growth in the high-single-digit to low-double-digit percent range [7] Cost Management and Restructuring - The 2022-2023 Geolocation Restructuring Program is expected to yield annualized savings of $145-$165 million, with cash outlays of $36 million anticipated through 2024 [9] Medium-Term Targets - Moody's aims for total revenue growth of at least 10% and adjusted operating margins in the low-50s range, with specific segment targets for revenue growth and operating margins outlined [10] Industry Context - Moody's operates within the Zacks Financial - Miscellaneous Services industry, where competitors like Lazard have shown positive performance, indicating a mixed outlook for the sector [13]