Back to top

Image: Bigstock

3 Reasons to Add Moody's (MCO) Stock to Your Portfolio Now

Read MoreHide Full Article

Moody's Corporation (MCO - Free Report) continues to be a leading provider of credit ratings, research, data & analytical tools, software solutions and related risk management services across the globe. The company is well positioned for growth on the back of its diverse revenue base and synergies from acquisitions.

However, several matters including a competitive business environment and stricter regulations pose near-term concerns for Moody’s. Despite these adverse factors, this Zacks Rank #2 (Buy) stock seems like an attractive investment opportunity right now as it has been witnessing solid upward estimate revisions.

Also, shares of Moody’s increased 20.7% over the past one year, marginally outperforming the Zacks categorized Miscellaneous Financial Services industry’s gain of 20.3%.



Here are the reasons that Moody’s is expected to be a solid pick now:

Synergies from Acquisitions: Moody’s growth has been reflected in several successful acquisitions over the last few years. These strategic deals have provided it with increased scale and cross-selling opportunities across products and vertical markets. The company is expected to continue pursuing acquisitions, driven by its strong balance sheet position.

Earnings Per Share Growth: Over the past three to five years, Moody’s witnessed earnings per share (EPS) growth of 11.1%. Notably, the company has a decent earnings surprise history, having delivered positive surprises in three of the trailing four quarters with an average beat of 3.58%.  

Further, the company’s earnings are projected to grow 8.5% in 2017 and 9.7% in 2018. Also, the company’s long-term (three to five years) estimated EPS growth rate of 11.7% promises rewards for investors in the long run.

Moreover, Moody’s has a Growth Score of ‘A.’ Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.

Revenue Strength: Moody’s remains focused on enhancing revenue growth. Its strategy to grow inorganically is paying off well. Notably, the company’s top line has grown at a five-year (2012–2016) CAGR of 7.2%.

Further, the company’s projected sales growth (F1/F0) of 5% (compared with nil growth for the industry) ensures further improvement in revenues.

Other Stocks Worth a Look

Some other finance stocks worth considering include MoneyGram International, Inc. , PJT Partners Inc. (PJT - Free Report) and Houlihan Lokey, Inc. (HLI - Free Report) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MoneyGram has witnessed an upward earnings estimate revision of 1.3% for the current year, over the past 60 days. Also, its share price is up 37.3%, over the last three months.

PJT Partners earnings estimates have been revised 7.4% upward for the current year in the past 60 days. Over the last three months, its share price increased 14%.

Houlihan Lokey recorded an upward earnings estimate revision of 2.3% for the current year in the past 60 days. Also, its share price has seen a 5.6% rise in the last three months.

More Stock News: This Is Bigger than the iPhone!    

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


Moody's Corporation (MCO) - $25 value - yours FREE >>

Houlihan Lokey, Inc. (HLI) - $25 value - yours FREE >>

PJT Partners Inc. (PJT) - $25 value - yours FREE >>