Moodys Corp /De/ (NYSE: MCO)

Sector: Financial Services Industry: Financial Data & Stock Exchanges CIK: 0001059556
Market Cap 80.83 Bn
P/B -87.18
P/E 188.94
P/S 21.48
ROIC (Qtr) 20.79
Div Yield % 0.57
Rev 1y % (Qtr) 10.70
Total Debt (Qtr) 7.36 Bn
Debt/Equity (Qtr) 1.86
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About

Moody's Corporation, also known as MCO, is a globally recognized risk assessment firm that operates in the financial industry. The company offers a range of services and solutions, primarily divided into two segments: Moody's Analytics (MA) and Moody's Investors Service (MIS). Moody's Analytics provides financial intelligence and analytical tools, while Moody's Investors Service is a leading global credit rating agency. Moody's Analytics offers a variety of products and services, including Research & Insights, Data & Information, and Decision Solutions,...

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Investment thesis

Bull case

  • Healthy cash reserves of 2.18B provide 22.26x coverage of short-term debt 98M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 2.72B provides exceptional 1358.50x coverage of minority interest expenses 2M, showing strong core operations.
  • Operating cash flow of 2.72B provides exceptional 11.71x coverage of interest expenses 232M, showing strong debt service capability.
  • Operating cash flow of 2.72B provides strong 11.92x coverage of stock compensation 228M, indicating sustainable incentive practices.
  • Strong operating cash flow of 2.72B provides 1.53x coverage of SG&A expenses 1.78B, showing efficient operational cost management.

Bear case

  • Operating cash flow of 2.72B barely covers its investment activities of (137M), with a coverage ratio of -19.83, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 2.72B provides thin coverage of dividend payments of (689M) with a -3.94 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 2.18B provide limited coverage of acquisition spending of (350M), which is -6.23x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 2.40B represents just -3.40x of debt issuance (705M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 17.41B provide limited buffer against comprehensive income items of (538M), which is -32.36x, indicating elevated exposure to market risks.

Consolidation Items Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Financial Data & Stock Exchanges
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SPGI S&P Global Inc. 125.09 Bn 27.98 8.16 13.58 Bn
2 CME Cme Group Inc. 102.51 Bn 68.45 28.03 152.46 Bn
3 ICE Intercontinental Exchange, Inc. 87.85 Bn 26.50 6.95 20.28 Bn
4 MCO Moodys Corp /De/ 80.83 Bn 188.94 21.48 7.36 Bn
5 NDAQ Nasdaq, Inc. 45.98 Bn 25.72 5.57 9.47 Bn
6 COIN Coinbase Global, Inc. 43.14 Bn 34.23 6.01 7.66 Bn
7 MSCI MSCI Inc. 39.87 Bn 33.16 12.72 6.31 Bn
8 CBOE Cboe Global Markets, Inc. 29.80 Bn 30.46 6.45 1.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.33 2.33
EV to Cash from Ops. EV/CFO 166.54 58.18
EV to Debt EV to Debt 11.16 16.65
EV to EBIT EV/EBIT 91.57 26.06
EV to EBITDA EV/EBITDA 89.01 28.31
EV to Free Cash Flow [EV/FCF] EV/FCF 213.02 -42.51
EV to Market Cap EV to Market Cap 1.02 1.22
EV to Revenue EV/Rev 21.83 21.49
Price to Book Value [P/B] P/B -87.18 -2.91
Price to Earnings [P/E] P/E 188.94 40.52
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.26 2.14
Dividend Payout Ratio % Div Payout % (Qtr) 29.40 32.20
Dividend per Basic Share Div per Share (Qtr) 3.67 2.66
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 27.38 26.87
Interest Coverage Int. cover (Qtr) 13.78 6.35
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -0.95 -9.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -17.45 19.34
Dividend Growth (1y) % Div 1y % (Qtr) 10.54 1.10
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 10.25 -0.85
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 11.90 7.35
EBIT Growth (1y) % EBIT 1y % (Qtr) 11.27 3.52
EBT Growth (1y) % EBT 1y % (Qtr) 13.08 6.34
EPS Growth (1y) % EPS 1y % (Qtr) 13.65 19.26
FCF Growth (1y) % FCF 1y % (Qtr) 3.14 32.90
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.05 11.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.49 0.61
Cash Payout Ratio Cash Payout (Qtr) 0.23 0.24
Cash Ratio Cash Ratio (Qtr) 0.87 0.52
Current Ratio Curr Ratio (Qtr) 1.84 1.97
Debt to Equity Ratio Debt/Equity (Qtr) 1.86 0.63
Interest Cover Ratio Int Coverage (Qtr) 13.78 6.35
Times Interest Earned Times Interest Earned (Qtr) 13.78 6.35
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 48.90 -986.89
EBIT Margin % EBIT Margin % (Qtr) 42.63 -993.67
EBT Margin % EBT Margin % (Qtr) 39.54 -1,072.83
Gross Margin % Gross Margin % (Qtr) 73.80 72.77
Net Profit Margin % Net Margin % (Qtr) 29.90 -1,442.37