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Moody's (MCO) Beats on Q2 Earnings, 2016 Outlook Reiterated
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Moody’s Corp. (MCO - Free Report) reported strong second-quarter 2016 results, wherein both earnings of $1.30 per share and revenues of $928.9 million beat the respective Zacks Consensus Estimate of $1.25 per share and $891.1 million. On a year-over-year basis, the metrics grew 1.6% and 1.2%, respectively. Though management maintained its full year outlook, it expects earnings to come in at the lower side of the guided range of $4.55- $4.65 due to an uncertain macroeconomic environment.
Domestic revenues were flat year over year at $545.9 million in the reported quarter. International revenues decreased 3% year over year to $383 million.
Segment wise, Moody’s Investors Service (MIS) revenues declined 2% year over year to $625.6 million. MIS revenues in the U.S. fell 3% to $399 million on a year-over-year basis while International revenues remained unchanged at $226.6 million.
Within the MIS segment, Global Corporate Finance revenues fell 5% year over year to $304.8 million due to reduced investment grade and speculative-grade bond issuance.
Global Structured Finance revenues fell 8% year over year to $111.5 million due to a slowdown in securitization in CMBS and CLO markets. Global Financial Institutions' revenues decreased 1% year over year to $89.7 million.
Global Public, Project and Infrastructure Finance division revenues grew 12% year over year to $112.3 million due to higher infrastructure-related issuance worldwide.
Moody’s Analytics (MA) revenues grew 9% year over year to $303.3 million bolstered by growth in research, data and analytics (RD&A) revenues (up 7% year over year to $168.3 million) and Enterprise Risk Solutions (ERS) revenues (up 17% year over year to $97.5 million).However, Global Professional Services revenues fell 2% year over year to$37.5 million.
MA revenues in the U.S. were $146.9 million, up 10%. Revenues from outside the U.S. were $156.4 million, up 8%.
Margins
Moody’s reported adjusted operating income of $441.4 million, down 1.3% year over year. Adjusted operating margin was 47.5% compared with 48.7% reported in the year-ago period.
Balance Sheet
Moody’s total cash, cash equivalents and short-term investments as of Jun 30, 2016 were $2 billion. Free cash flow for the first half of the year amounted to $474.5 million, down 14%. The company exited the quarter with $3.4 billion of outstanding debt and $1 billion debt in its revolving credit facility.
During the quarter, the company repurchased 2.3 million shares for $223.8 million and issued 0.2 million shares as part of its employee stock-based compensation plans.
For the full year, revenues are expected to be up in low single digits asprojected earlier. Further, the company expects capital expenditure of $125 million. Free cash flow is expected to be $1 billion.
However, the company continues to project adjusted operating margin of 45% and expects operating expenses to increase in mid-single digits.
Zacks Rank
Currently, Moody’s has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Moneygram International Inc , Euronet Worldwide, Inc. (EEFT - Free Report) and Fortress Transportation and Infrastructure Investors LLC (FTAI - Free Report) . Moneygram sports a Zacks Rank#1 (Strong Buy) while Euronet and Fortress Transportation carry a Zacks Rank #2 (Buy).
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Moody's (MCO) Beats on Q2 Earnings, 2016 Outlook Reiterated
Moody’s Corp. (MCO - Free Report) reported strong second-quarter 2016 results, wherein both earnings of $1.30 per share and revenues of $928.9 million beat the respective Zacks Consensus Estimate of $1.25 per share and $891.1 million. On a year-over-year basis, the metrics grew 1.6% and 1.2%, respectively. Though management maintained its full year outlook, it expects earnings to come in at the lower side of the guided range of $4.55- $4.65 due to an uncertain macroeconomic environment.
Quarterly Segment Details
Domestic revenues were flat year over year at $545.9 million in the reported quarter. International revenues decreased 3% year over year to $383 million.
Segment wise, Moody’s Investors Service (MIS) revenues declined 2% year over year to $625.6 million. MIS revenues in the U.S. fell 3% to $399 million on a year-over-year basis while International revenues remained unchanged at $226.6 million.
Within the MIS segment, Global Corporate Finance revenues fell 5% year over year to $304.8 million due to reduced investment grade and speculative-grade bond issuance.
Global Structured Finance revenues fell 8% year over year to $111.5 million due to a slowdown in securitization in CMBS and CLO markets. Global Financial Institutions' revenues decreased 1% year over year to $89.7 million.
Global Public, Project and Infrastructure Finance division revenues grew 12% year over year to $112.3 million due to higher infrastructure-related issuance worldwide.
Moody’s Analytics (MA) revenues grew 9% year over year to $303.3 million bolstered by growth in research, data and analytics (RD&A) revenues (up 7% year over year to $168.3 million) and Enterprise Risk Solutions (ERS) revenues (up 17% year over year to $97.5 million).However, Global Professional Services revenues fell 2% year over year to$37.5 million.
MA revenues in the U.S. were $146.9 million, up 10%. Revenues from outside the U.S. were $156.4 million, up 8%.
Margins
Moody’s reported adjusted operating income of $441.4 million, down 1.3% year over year. Adjusted operating margin was 47.5% compared with 48.7% reported in the year-ago period.
Balance Sheet
Moody’s total cash, cash equivalents and short-term investments as of Jun 30, 2016 were $2 billion. Free cash flow for the first half of the year amounted to $474.5 million, down 14%. The company exited the quarter with $3.4 billion of outstanding debt and $1 billion debt in its revolving credit facility.
During the quarter, the company repurchased 2.3 million shares for $223.8 million and issued 0.2 million shares as part of its employee stock-based compensation plans.
MOODYS CORP Price, Consensus and EPS Surprise
MOODYS CORP Price, Consensus and EPS Surprise | MOODYS CORP Quote
Guidance
For the full year, revenues are expected to be up in low single digits asprojected earlier. Further, the company expects capital expenditure of $125 million. Free cash flow is expected to be $1 billion.
However, the company continues to project adjusted operating margin of 45% and expects operating expenses to increase in mid-single digits.
Zacks Rank
Currently, Moody’s has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Moneygram International Inc , Euronet Worldwide, Inc. (EEFT - Free Report) and Fortress Transportation and Infrastructure Investors LLC (FTAI - Free Report) . Moneygram sports a Zacks Rank#1 (Strong Buy) while Euronet and Fortress Transportation carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>