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Moody's (MCO) to Report Q1 Earnings: Will it Beat Again?
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We expect Moody's Corporation (MCO - Free Report) to beat on earnings expectations when it reports its first-quarter 2017 results on May 5.
Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results were driven by higher revenues, partially offset by increased expenses.
Following this impressive performance and with improvement in operating environment, Moody’s shares jumped 17.4% during the three months ended Mar 31, 2017. Further, analysts too seem to be happy with the company’s business activities.
Over the last 30 days, the stock witnessed two upward revisions (no downward revision). Also, the Zacks Consensus Estimate rose 1.7% to $1.22, over the last seven days. The company recorded positive earnings surprises in three of the trailing four quarters, with an average beat of 3.6%.
Our proven model shows that Moody’s has the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to deliver a positive earnings surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP of Moody’s is +7.38%. This is because the Most Accurate estimate of $1.31 is above the Zacks Consensus Estimate of $1.22.
Zacks Rank: Moody’s Zacks Rank #2 (Buy) further increases the predictive power of ESP.
What’s Driving the Better-than-Expected Results?
During the first quarter, bond issuance trends were impressive across the globe, with investment grade and high yield issuance rebounding sequentially. Nevertheless, structured products issuance, particularly in the commercial mortgage-backed securities and collateralized loan obligations markets were soft. Therefore, ratings revenues should rise modestly in the quarter.
Also, Moody’s should record revenue growth on the back of its strategic acquisitions, which has increased scale and cross-selling opportunities across products and vertical markets. However, strength in the U.S. dollar is likely to impact quarterly revenues to some extent.
Now coming to expenses, management expects incentive compensation to be in the range of $40–$45 million during the quarter. This is up from $32 million recorded in the prior-year quarter. Further, total operating expenses are projected to be $532 million in the first quarter.
Other Stocks that Warrant a Look
Here are some other finance stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Main Street Capital Corporation (MAIN - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #3. The company is slated to release results on May 4.
ARES MANAGEMENT LP (ARES - Free Report) has an Earnings ESP of +2.56 % and carries a Zacks Rank #3. It is slated to release results on May 8.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Moody's (MCO) to Report Q1 Earnings: Will it Beat Again?
We expect Moody's Corporation (MCO - Free Report) to beat on earnings expectations when it reports its first-quarter 2017 results on May 5.
Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results were driven by higher revenues, partially offset by increased expenses.
Following this impressive performance and with improvement in operating environment, Moody’s shares jumped 17.4% during the three months ended Mar 31, 2017. Further, analysts too seem to be happy with the company’s business activities.
Over the last 30 days, the stock witnessed two upward revisions (no downward revision). Also, the Zacks Consensus Estimate rose 1.7% to $1.22, over the last seven days. The company recorded positive earnings surprises in three of the trailing four quarters, with an average beat of 3.6%.
Moody's Corporation Price and EPS Surprise
Moody's Corporation Price and EPS Surprise | Moody's Corporation Quote
Why a Likely Positive Surprise?
Our proven model shows that Moody’s has the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to deliver a positive earnings surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP of Moody’s is +7.38%. This is because the Most Accurate estimate of $1.31 is above the Zacks Consensus Estimate of $1.22.
Zacks Rank: Moody’s Zacks Rank #2 (Buy) further increases the predictive power of ESP.
What’s Driving the Better-than-Expected Results?
During the first quarter, bond issuance trends were impressive across the globe, with investment grade and high yield issuance rebounding sequentially. Nevertheless, structured products issuance, particularly in the commercial mortgage-backed securities and collateralized loan obligations markets were soft. Therefore, ratings revenues should rise modestly in the quarter.
Also, Moody’s should record revenue growth on the back of its strategic acquisitions, which has increased scale and cross-selling opportunities across products and vertical markets. However, strength in the U.S. dollar is likely to impact quarterly revenues to some extent.
Now coming to expenses, management expects incentive compensation to be in the range of $40–$45 million during the quarter. This is up from $32 million recorded in the prior-year quarter. Further, total operating expenses are projected to be $532 million in the first quarter.
Other Stocks that Warrant a Look
Here are some other finance stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Main Street Capital Corporation (MAIN - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #3. The company is slated to release results on May 4.
Hudson Pacific Properties, Inc. (HPP - Free Report) is scheduled to release results on May 4. The stock has an Earnings ESP of +2.08% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
ARES MANAGEMENT LP (ARES - Free Report) has an Earnings ESP of +2.56 % and carries a Zacks Rank #3. It is slated to release results on May 8.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>