Moody's Corporation (MCO) | Investment Case

1. Company Snapshot

1.a. Company Description

Moody's Corporation operates as an integrated risk assessment firm worldwide.It operates in two segments, Moody's Investors Service and Moody's Analytics.The Moody's Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as and structured finance securities.

This segment provides ratings in approximately 140 countries.Its ratings are disseminated through press releases to the public through electronic media, including the internet and real-time information systems used by securities traders and investors.This segment has rated approximately 5,000 non-financial corporates; 3,600 financial institutions; 16,000 public finance issuers; 145 sovereigns; 47 supranational institutions; 459 sub-sovereigns; and 1,000 infrastructure and project finance issuers, as well as 9,100 structured finance deals.

The Moody's Analytics segment develops a range of products and services that support the 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, commercial real estate data and analytical tools, and on-line and classroom-based training services, as well as credentialing and certification services.It also offers offshore analytical and research services with learning solutions and certification programs; and software solutions, as well as related risk management services.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.

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1.b. Last Insights on MCO

Moody's Corporation faced negative drivers, including decreased stakes from various institutional investors, such as Arrowstreet Capital Limited Partnership, Campbell & CO Investment Adviser LLC, and Cynosure Group LLC. The reductions in holdings were significant, with decreases of 27.2%, 68.2%, and 61.2%, respectively. Additionally, some investors, like Bell Asset Management Ltd, reduced their stakes by 21.7%. Despite a "Moderate Buy" consensus rating from brokerages, with 12 buy recommendations and 1 strong buy, these sales may have contributed to downward pressure.

1.c. Company Highlights

Last Price	440.79
Change Percentage	0.46%
Open	432.42
Previous Close	438.78
Market Cap ( Millions)	78152
Volume	509649
Year High	546.88
Year Low	378.71
M A 50	457.11
M A 200	487.76

FCF Yield	3.61%
Dividend Yield	0.87%
ROE	62.81%
Debt / Equity	181.33%
Net Debt / EBIDTA	127.65%
Price To Book	19.34
Price Earnings Ratio	31.89
Price To FCF	27.71
Price To sales	10.13
EV / EBITDA	21.36

2. Moody's Delivers Strong 2025 Results with 9% Revenue Growth

Moody's Corporation reported total revenue exceeding $7,700,000,000 in 2025, a 9% year-over-year increase. The company's adjusted operating margin expanded to 51.1%, up 300 basis points, while adjusted EPS reached a record $14.94, a 20% year-over-year increase. The strong financial performance was driven by the company's ratings business, which rated $6,600,000,000,000 of debt in 2025, an all-time high. The adjusted EPS figure is a significant improvement, beating analyst estimates, similar to the beat seen in the actual EPS of $3.64 versus the estimated $3.43.

Publication Date: Feb -19

                                    📋 Highlights
                                    Total Revenue Growth::
                                                Exceeded $7.7 billion in 2025, up 9% YoY.
Adjusted EPS Record::
                                                Reached $14.94 in 2025, a 20% YoY increase.
Private Credit Expansion::
                                                Revenue surged 60% in 2025 due to rising demand for ratings.
Recurring Revenue Dominance::
                                                Represented 97% of Q4 revenue, up 11% YoY.
2026 Guidance::
                                                Adjusted EPS expected at ~$18 (+10% YoY), with free cash flow of $2.8–$3 billion.

                                

Segment Performance

Moody's Investors Service (MIS) revenue was up 17% year-over-year in the fourth quarter, driven by strong activity in corporate finance, particularly in the investment-grade asset class. Project and infrastructure finance had near-record issuance, and private credit grew 40% in Q4. Moody's Analytics (MA) delivered strong results in 2025, with Decision Solutions, including KYC, insurance, and banking, driving high single-digit ARR growth. KYC remains the fastest-growing component, with 15% ARR growth in 2025.

Guidance and Outlook

The company expects issuance activity to be front-loaded in the first half of 2026, with around 55% of total issuance occurring in the first half. Revenue growth is expected to be in the mid-teens for the first half of 2026, with the first quarter seeing a mid-20s percentage growth. For 2026, MA expects revenue growth in the high single-digit percent range and adjusted operating margin expansion of 150 basis points to 50-53%. The company also expects free cash flow to be in the range of $2.8 billion to $3 billion, with a return of at least 90% of free cash flow to shareholders.

Valuation and Metrics

With a P/E Ratio of 32.61 and an EV/EBITDA of 25.28, Moody's Corporation is trading at a premium. The ROE of 62.81% and ROIC of 20.36% indicate strong profitability. The company's guidance for 2026 suggests continued growth, with adjusted EPS expected to be around $18, a 10% increase from the prior year. Analysts estimate next year's revenue growth at 7.7%, indicating a stable outlook for the company.

AI and Innovation

Moody's is investing in future growth while expanding margin, with a focus on AI and innovation. The company is building a single standard GenAI-led product development lifecycle process and embedding advanced analytics and GenAI into core workflows to drive higher productivity and faster delivery for customers. The company's unique data estate, entity resolution, and historical depth provide a strong foundation for its AI initiatives.

3. NewsRoom

VIRT vs. MCO: Which Stock Should Value Investors Buy Now?

Apr -02

Source: zacks.com

Date Set For Moody's Earnings Release And Investor Teleconference

Apr -02

Source: businesswire.com

Canoe Financial LP Has $217.58 Million Stake in Moody’s Corporation $MCO

Mar -29

Source: defenseworld.net

AGI Bust, AI Boom: Why AI's Winners And Losers Aren't Who You Think

Mar -27

Source: seekingalpha.com

Moody's Corporation: Cheap Enough And Well-Protected

Mar -26

Source: seekingalpha.com

2 Oversold Dividend Growth Stocks to Buy Now

Mar -25

Source: fool.com

Moody’s Corporation $MCO Shares Sold by Congress Asset Management Co.

Mar -24

Source: defenseworld.net

Warren Buffett's Berkshire Hathaway Is Doubling Its Money in Coca-Cola, American Express, and Moody's Every 21 to 30 Months -- Here's How

Mar -20

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.10%)

6. Segments

Moody's Investors Service (MIS)

Expected Growth: 7.5%

MIS is expected to grow at a slightly lower rate than the global average due to potential regulatory pressures and market competition. However, its strong brand and the essential nature of its services will support steady growth. The growth rate is slightly lower than the global average due to these factors.

Moody's Analytics (MA)

Expected Growth: 9.0%

MA is poised for higher growth due to the increasing demand for advanced financial analytics, risk management tools, and the digital transformation in the financial services sector. The segment is well-positioned to capitalize on these trends, driving its growth above the global average.

Eliminations

Expected Growth: None%

None

7. Detailed Products

Credit Ratings

Moody's credit ratings provide an independent opinion on the credit quality of issuers and their debt securities, helping investors make informed investment decisions.

Research and Analytics

Moody's research and analytics provide in-depth analysis and insights on credit markets, economies, and industries, helping investors and businesses make informed decisions.

Risk Management Solutions

Moody's risk management solutions provide tools and services to help businesses and investors identify, assess, and manage credit risk, market risk, and operational risk.

ESG (Environmental, Social, and Governance) Solutions

Moody's ESG solutions provide data, analytics, and insights on environmental, social, and governance factors, helping investors and businesses make sustainable investment decisions.

KYC (Know Your Customer) and AML (Anti-Money Laundering) Solutions

Moody's KYC and AML solutions provide tools and services to help businesses comply with anti-money laundering and know-your-customer regulations.

Commercial Credit Scores

Moody's commercial credit scores provide a numerical representation of a company's creditworthiness, helping businesses and investors make informed credit decisions.

Data and Analytics Platforms

Moody's data and analytics platforms provide access to a wide range of credit, economic, and financial data, helping businesses and investors make informed decisions.

8. Moody's Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Moody's Corporation has a low threat of substitutes due to its strong brand recognition and high barriers to entry in the credit rating industry.

Bargaining Power Of Customers

Moody's Corporation has a medium bargaining power of customers due to the presence of large institutional investors and a relatively concentrated customer base.

Bargaining Power Of Suppliers

Moody's Corporation has a low bargaining power of suppliers due to its ability to source data and information from a diverse range of providers.

Threat Of New Entrants

Moody's Corporation has a low threat of new entrants due to the high barriers to entry in the credit rating industry, including regulatory hurdles and the need for significant investment in infrastructure and talent.

Intensity Of Rivalry

Moody's Corporation operates in a highly competitive industry with intense rivalry among the major credit rating agencies, including S&P Global and Fitch Ratings.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	68.18%
Debt Cost	4.24%
Equity Weight	31.82%
Equity Cost	10.43%
WACC	6.21%
Leverage	214.26%

11. Quality Control: Moody's Corporation passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

CME Group

A-Score: 7.2/10

Value: 2.3

Growth: 5.9

Quality: 8.6

Yield: 8.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

Nasdaq

A-Score: 5.6/10

Value: 1.8

Growth: 5.7

Quality: 7.0

Yield: 3.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

ICE

A-Score: 5.6/10

Value: 2.5

Growth: 6.1

Quality: 6.9

Yield: 2.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

MSCI

A-Score: 5.5/10

Value: 2.8

Growth: 7.9

Quality: 7.5

Yield: 2.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

S&P Global

A-Score: 5.3/10

Value: 1.6

Growth: 6.7

Quality: 8.1

Yield: 1.0

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

Moody's

A-Score: 5.2/10

Value: 0.8

Growth: 6.2

Quality: 7.7

Yield: 2.0

Momentum: 5.5

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.59%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.21%

Moody's Corporation - US6153691059

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on MCO

1.c. Company Highlights

Expensive

Average Yield

Medium Volatility

Earnings Beats

Revenues Beats

Less Volatile

Lower Yield

Stable Momentum

Revenues Miss

Average Growth

Average Quality

Better Quality

2. Moody's Delivers Strong 2025 Results with 9% Revenue Growth

Segment Performance

Guidance and Outlook

Valuation and Metrics

AI and Innovation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.10%)

6. Segments

Moody's Investors Service (MIS)

Expected Growth: 7.5%

Moody's Analytics (MA)

Expected Growth: 9.0%

Eliminations

Expected Growth: None%

7. Detailed Products

Credit Ratings

Research and Analytics

Risk Management Solutions

ESG (Environmental, Social, and Governance) Solutions

KYC (Know Your Customer) and AML (Anti-Money Laundering) Solutions

Commercial Credit Scores

Data and Analytics Platforms

8. Moody's Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Moody's Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

440.79$

Current Price

440.79$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA