NYSE:MCO

Stock Analysis Report

Executive Summary

Moody's Corporation provides credit ratings; and credit, capital markets, and economic research, data, and analytical tools worldwide.

Rewards

Trading at 38% below its fair value

Earnings are forecast to grow 10.53% per year

Earnings grew by 21% over the past year

Risk Analysis

No risks detected for MCO from our risk checks.


Snowflake Analysis

Solid track record and slightly overvalued.


Similar Companies

Share Price & News

How has Moody's's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MCO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.9%

MCO

2.4%

US Capital Markets

2.0%

US Market


1 Year Return

61.6%

MCO

18.9%

US Capital Markets

23.5%

US Market

Return vs Industry: MCO exceeded the US Capital Markets industry which returned 21.7% over the past year.

Return vs Market: MCO exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

MCOIndustryMarket
7 Day3.9%2.4%2.0%
30 Day8.9%4.1%4.3%
90 Day18.6%14.6%12.2%
1 Year63.3%61.6%21.3%18.9%26.1%23.5%
3 Year163.7%155.0%48.9%40.5%53.1%43.2%
5 Year192.3%174.7%96.0%77.8%75.5%56.1%

Price Volatility Vs. Market

How volatile is Moody's's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Moody's undervalued compared to its fair value and its price relative to the market?

35.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MCO ($249.43) is trading below our estimate of fair value ($402.55)

Significantly Below Fair Value: MCO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: MCO is poor value based on its PE Ratio (36.6x) compared to the Capital Markets industry average (36.1x).

PE vs Market: MCO is poor value based on its PE Ratio (36.1x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: MCO is poor value based on its PEG Ratio (3.4x)


Price to Book Ratio

PB vs Industry: MCO is overvalued based on its PB Ratio (99.6x) compared to the US Capital Markets industry average (6.6x).


Next Steps

Future Growth

How is Moody's forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

11.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MCO's forecast earnings growth (10.5% per year) is above the savings rate (1.7%).

Earnings vs Market: MCO's earnings (10.5% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: MCO's earnings are forecast to grow, but not significantly.

Revenue vs Market: MCO's revenue (6% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: MCO's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MCO's Return on Equity is forecast to be very high in 3 years time (224%).


Next Steps

Past Performance

How has Moody's performed over the past 5 years?

7.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MCO has high quality earnings.

Growing Profit Margin: MCO's current net profit margins (28.2%) are higher than last year (23.9%).


Past Earnings Growth Analysis

Earnings Trend: MCO's earnings have grown by 7.1% per year over the past 5 years.

Accelerating Growth: MCO's earnings growth over the past year (21%) exceeds its 5-year average (7.1% per year).

Earnings vs Industry: MCO earnings growth over the past year (21%) exceeded the Capital Markets industry 20.6%.


Return on Equity

High ROE: Whilst MCO's Return on Equity (187.84%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Moody's's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: MCO has a low level of unsold assets or inventory.

Debt Coverage by Assets: MCO's debt is not covered by short term assets (assets are 0.6x debt).


Financial Institutions Analysis

Asset Level: MCO's level of assets compared to its equity is moderate.

Allowance for Bad Loans: Insufficient data to determine if MCO has a sufficient allowance for bad loans.

Low Risk Liabilities: MCO reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if MCO has an acceptable proportion of non-loan assets held.

Low Risk Deposits: MCO has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if MCO has an appropriate level of bad loans.


Next Steps

Dividend

What is Moody's's current dividend yield, its reliability and sustainability?

0.78%

Current Dividend Yield


Dividend Yield vs Market

company0.8%marketbottom25%1.4%markettop25%3.7%industryaverage1.8%forecastin3Years0.9%

Current dividend yield vs market & industry

Notable Dividend: MCO's dividend (0.8%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: MCO's dividend (0.8%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: MCO is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: MCO is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: MCO is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of MCO's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Moody's's salary, the management and board of directors tenure and is there insider trading?

1.6yrs

Average management tenure


CEO

Ray McDaniel (61yo)

14.8yrs

Tenure

US$10,556,511

Compensation

Mr. Raymond W. McDaniel, Jr., also known as Ray, has been the President at Moody's Corporation since April 2012 and serves as its Chief Executive Officer since April 26, 2005 . In this role, Mr. McDaniel i ...


CEO Compensation Analysis

Compensation vs Market: Ray's total compensation ($USD10.56M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Ray's compensation has been consistent with company performance over the past year.


Management Age and Tenure

1.6yrs

Average Tenure

58yo

Average Age

Experienced Management: MCO's management team is not considered experienced ( 1.6 years average tenure), which suggests a new team.


Board Age and Tenure

6.9yrs

Average Tenure

64yo

Average Age

Experienced Board: MCO's board of directors are considered experienced (6.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$171,93417 May 19
Robert Fauber
EntityIndividual
Role
Chief Operating Officer
Chief Operating Officer
Shares920
Max PriceUS$187.25
SellUS$254,08015 May 19
Robert Fauber
EntityIndividual
Role
Chief Operating Officer
Chief Operating Officer
Shares1,380
Max PriceUS$184.85
SellUS$728,63014 May 19
Richard Cantor
EntityIndividual
Shares3,959
Max PriceUS$184.04
SellUS$94,69107 May 19
Melanie Hughes
EntityIndividual
Shares480
Max PriceUS$197.27

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Ray McDaniel (61yo)

    President

    • Tenure: 14.8yrs
    • Compensation: US$10.56m
  • John Goggins (58yo)

    Executive VP & General Counsel

    • Tenure: 19.3yrs
    • Compensation: US$2.06m
  • Mark Almeida (59yo)

    Special Advisor

    • Tenure: 12.4yrs
    • Compensation: US$3.45m
  • Jeff Hare

    Senior Vice President of Risk Management

    • Compensation: US$1.23m
  • Rob Fauber (49yo)

    Chief Operating Officer

    • Tenure: 0.2yrs
    • Compensation: US$2.82m
  • Shivani Kak

    Head of Investor Relations

    • Tenure: 0.3yrs
  • Mark Kaye (39yo)

    Senior VP & CFO

    • Tenure: 1.4yrs
    • Compensation: US$3.37m
  • Helene Gurian

    Chief Compliance Officer

    • Tenure: 2.6yrs
  • David Hogan

    MD, Assistant Controller

    • Tenure: 1.6yrs
  • Mona Breed

    Senior VP & Chief Information Officer

    • Tenure: 1.3yrs

Board Members

  • Vince Forlenza (66yo)

    Independent Director

    • Tenure: 1.8yrs
    • Compensation: US$258.68k
  • Hank McKinnell (76yo)

    Chairman of the Board

    • Tenure: 7.8yrs
    • Compensation: US$415.08k
  • Basil Anderson (74yo)

    Independent Director

    • Tenure: 15.8yrs
    • Compensation: US$310.06k
  • Ray McDaniel (61yo)

    President

    • Tenure: 14.8yrs
    • Compensation: US$10.56m
  • Bruce Van Saun (62yo)

    Independent Director

    • Tenure: 3.8yrs
    • Compensation: US$285.06k
  • Jorge Bermudez (67yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: US$285.06k
  • Kathy Hill (62yo)

    Independent Director

    • Tenure: 8.3yrs
    • Compensation: US$310.06k
  • Gerrit Zalm (67yo)

    Independent Director

    • Tenure: 1.8yrs
    • Compensation: US$258.68k
  • Thérèse Esperdy (58yo)

    Non-Executive Director

    • Tenure: 0.8yrs
  • Leslie Seidman (57yo)

    Independent Director

    • Tenure: 6.1yrs
    • Compensation: US$310.06k

Company Information

Moody's Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Moody's Corporation
  • Ticker: MCO
  • Exchange: NYSE
  • Founded: 1900
  • Industry: Financial Exchanges and Data
  • Sector: Diversified Financials
  • Market Cap: US$48.330b
  • Shares outstanding: 188.75m
  • Website: https://www.moodys.com

Number of Employees


Location

  • Moody's Corporation
  • 7 World Trade Center
  • 250 Greenwich Street
  • New York
  • New York
  • 10007
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MCONYSE (New York Stock Exchange)YesCommon StockUSUSDJun 1998
DUTDB (Deutsche Boerse AG)YesCommon StockDEEURJun 1998
MCO *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 1998
0K36LSE (London Stock Exchange)YesCommon StockGBUSDJun 1998
MOCOWBAG (Wiener Boerse AG)YesCommon StockATEURJun 1998
MCOR34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REPR 0.25 COM USD0.01BRBRLMay 2019

Biography

Moody's Corporation provides credit ratings; and credit, capital markets, and economic research, data, and analytical tools worldwide. It operates through two segments, Moody’s Investors Service and Moody’s Analytics. The Moody’s Investors Service segment publishes credit ratings on various debt obligations and entities that issue such obligations, such as various corporate and governmental obligations, structured finance securities, and commercial paper programs. This segment provides ratings in approximately 130 countries. Its ratings are disseminated through press releases to the public through print and electronic media, including the Internet and real-time information systems used by securities traders and investors. As of December 31, 2018, this segment had ratings relationships with approximately 4,800 non-financial corporate issuers; 4,100 financial institutions issuers; 17,600 sovereign, sub-sovereign, and supranational public finance issuers; and 1,000 infrastructure and project finance issuers, as well as 9,600 structured finance transactions. The Moody’s Analytics segment develops a range of products and services that support financial analysis and risk management activities of institutional participants in financial markets; and offers subscription based research, data, and analytical products comprising credit ratings, credit research, quantitative credit scores and other analytical tools, economic research and forecasts, business intelligence and company information products, and commercial real estate data and analytical tools. It also offers software solutions, as well as related risk management services; and offshore analytical and research services with learning solutions and certification programs. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/17 23:35
End of Day Share Price2020/01/17 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.