Moodys Corp /De/ (MCO) Stock Analysis and Metrics

Sector: Financial Services Industry: Financial Data & Stock Exchanges CIK: 0001059556

Market Cap 90.39 Bn

P/B 22.84

P/E 40.28

P/S 12.05

ROIC (Qtr) 20.79

Div Yield % 0.92

Rev 1y % (Qtr) 10.70

Total Debt (Qtr) 7.36 Bn

Debt/Equity (Qtr) 1.86

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,...

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, designed to support the growth, efficiency, and risk management objectives of financial services, corporate, and public sector entities. Research & Insights offer customers in-depth analysis and forecasts on various markets and industries, while Data & Information provides access to a vast repository of financial and economic data. Decision Solutions, on the other hand, offer customers the tools and expertise needed to make informed decisions.

Moody's Investors Service provides credit ratings, research, and risk analysis, primarily to issuers of debt securities, investors, and financial institutions. MIS's credit ratings are widely used to assess the creditworthiness of debt issuers and provide investors with a comprehensive view of the credit markets. These credit ratings provide investors with an independent assessment of a borrower's ability to meet its debt obligations, enabling them to make informed investment decisions.

Moody's has established a strong competitive position in the industry, known for its high-quality credit ratings and research. The company competes with other credit rating agencies such as Standard & Poor's and Fitch Ratings, as well as financial institutions and research firms. Moody's has a diverse customer base, serving over 100 countries, including financial institutions, corporations, governments, and other organizations that rely on credit ratings and research for informed decision-making.

In terms of sustainability, Moody's has made significant progress in recent years. The company has implemented various initiatives to reduce its environmental impact, including the use of renewable energy and reducing waste. Moody's has also made efforts to promote diversity and inclusion, focusing on increasing the representation of women and minorities in the workforce.

Moody's has a strong track record of innovation, focusing on developing new products and services that meet the evolving needs of its customers. The company has made significant investments in technology, including the development of artificial intelligence and machine learning capabilities.

Price action

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.

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.	157.13 Bn	37.25	10.47	11.87 Bn
2	CME	Cme Group Inc.	96.82 Bn	26.05	15.13	152.46 Bn
3	ICE	Intercontinental Exchange, Inc.	91.82 Bn	29.04	7.33	19.51 Bn
4	MCO	Moodys Corp /De/	90.39 Bn	40.28	12.05	7.36 Bn
5	COIN	Coinbase Global, Inc.	62.10 Bn	19.30	8.10	7.59 Bn
6	NDAQ	Nasdaq, Inc.	54.56 Bn	33.58	6.68	9.55 Bn
7	MSCI	MSCI Inc.	43.97 Bn	35.94	14.39	5.62 Bn
8	CBOE	Cboe Global Markets, Inc.	25.92 Bn	26.50	5.61	1.57 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	6.19	2.79
EV to Cash from Ops. EV/CFO	35.15	33.08
EV to Debt EV to Debt	12.97	17.54
EV to EBIT EV/EBIT	29.86	18.27
EV to EBITDA EV/EBITDA	26.45	20.66
EV to Free Cash Flow [EV/FCF] EV/FCF	39.82	-39.00
EV to Market Cap EV to Market Cap	1.06	1.08
EV to Revenue EV/Rev	12.73	29.85
Price to Book Value [P/B] P/B	22.84	-0.11
Price to Earnings [P/E] P/E	40.28	23.23

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	3.26	2.12
Dividend Payout Ratio % Div Payout % (Qtr)	29.40	32.37
Dividend per Basic Share Div per Share (Qtr)	3.67	2.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	27.38	26.82
Interest Coverage Int. cover (Qtr)	13.78	8.16

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	-0.95	-11.26
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	-17.45	21.19
Dividend Growth (1y) % Div 1y % (Qtr)	10.54	1.08
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	10.25	10.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	11.90	15.05
EBIT Growth (1y) % EBIT 1y % (Qtr)	11.27	17.06
EBT Growth (1y) % EBT 1y % (Qtr)	13.08	21.11
EPS Growth (1y) % EPS 1y % (Qtr)	13.65	31.00
FCF Growth (1y) % FCF 1y % (Qtr)	3.14	30.56
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	10.05	13.67

Liquidity Ratios	Value	Ind Avg
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	0.51
Current Ratio Curr Ratio (Qtr)	1.84	1.97
Debt to Equity Ratio Debt/Equity (Qtr)	1.86	0.56
Interest Cover Ratio Int Coverage (Qtr)	13.78	8.16
Times Interest Earned Times Interest Earned (Qtr)	13.78	8.16

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	48.90	-985.15
EBIT Margin % EBIT Margin % (Qtr)	42.63	-991.90
EBT Margin % EBT Margin % (Qtr)	39.54	-1,071.07
Gross Margin % Gross Margin % (Qtr)	73.80	72.61
Net Profit Margin % Net Margin % (Qtr)	29.90	-1,440.85

Moodys Corp /De/ (NYSE: MCO)

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