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Global Bond Issuance Volume to Aid Moody's (MCO) Q2 Earnings
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Moody's Corporation (MCO - Free Report) is scheduled to report second-quarter 2018 results on Jul 27, before the opening bell. The company is expected to report a rise in revenues in its Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division.
While rising interest rates are likely to have slowed down corporates’ involvement in debt issuances to some extent, the overall backdrop for bond issuance during the second quarter was decent. Although high yield bond issuance volumes were not quite great during the quarter, investment grade bond and leveraged loan issuance volumes were healthy.
Thus, Corporate Finance revenues are expected to rise. The Zacks Consensus Estimate for the same is $371 million for the to-be-reported quarter, indicating growth of 4.2% year over year.
Also, quarterly issuance volume for commercial mortgage-backed securities, collateralized loan obligations and asset backed securities was healthy. Therefore, Moody’s will likely witness a rise in Structured Finance revenues in the to-be-reported quarter. The Zacks Consensus Estimate is $130 million, indicating 9.2% growth from the prior-year quarter.
Further, MIS division’s another revenue source — Financial Institutions — is anticipated to report $110 million of revenues, up 7.8% from the prior-year quarter. However, Public, Project and Infrastructure Finance unit revenues are projected to either remain stable or decline marginally year over year to $104 million as municipal bond issuance slowed in the to-be-reported quarter.
Overall, the MIS division is projected to witness year-over-year growth in the top line. The Zacks Consensus Estimate for the division’s revenues is $719 million, reflecting an increase of 4.7%.
Other Factors at Play
Higher revenues from Moody's Analytics (“MA”) division: Moody’s continues to pursue growth in areas outside the core credit ratings service. Given the rise in demand for analytics, the company’s MA division is expected to witness a rise in revenues. All three business units at the division are anticipated to witness higher revenues in the to-be-reported quarter. The Zacks Consensus Estimate for the division’s revenues of $434 million indicates a surge of 38.2% from the prior-year quarter.
Strategic deals/investments to support revenues: Moody’s is likely to witness revenue growth on the back of its strategic acquisitions and investments. These have increased the scale and cross-selling opportunities across products and vertical markets.
Expenses to remain high: As Moody’s continues with its inorganic growth strategy, acquisition and restructuring costs are expected to remain high. So, overall expenses are anticipated to rise during the quarter.
Now, let’s see what our quantitative model predicts.
According to our quantitative model, chances of Moody’s beating the Zacks Consensus Estimate in the second quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Moody’s is +0.97%.
Zacks Rank: Moody’s currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for earnings of $1.88 for the to-be-reported quarter has been revised 1.1% upward over the past 30 days. Also, the figure reflects a year-over-year improvement of 24.5%. Further, the consensus estimate for sales of $1.15 billion for the second quarter reflects 14.8% growth from the prior-year quarter.
Comerica’s Zacks Consensus Estimate for current-year earnings has been revised 5.3% upward over the past 60 days.
T. Rowe Price’s earnings estimates for the current year have been revised upward by 1.8% over the past 60 days.
Ally Financial has witnessed a marginal upward earnings estimate revision for the current year over the past 60 days.
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Global Bond Issuance Volume to Aid Moody's (MCO) Q2 Earnings
Moody's Corporation (MCO - Free Report) is scheduled to report second-quarter 2018 results on Jul 27, before the opening bell. The company is expected to report a rise in revenues in its Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division.
While rising interest rates are likely to have slowed down corporates’ involvement in debt issuances to some extent, the overall backdrop for bond issuance during the second quarter was decent. Although high yield bond issuance volumes were not quite great during the quarter, investment grade bond and leveraged loan issuance volumes were healthy.
Thus, Corporate Finance revenues are expected to rise. The Zacks Consensus Estimate for the same is $371 million for the to-be-reported quarter, indicating growth of 4.2% year over year.
Also, quarterly issuance volume for commercial mortgage-backed securities, collateralized loan obligations and asset backed securities was healthy. Therefore, Moody’s will likely witness a rise in Structured Finance revenues in the to-be-reported quarter. The Zacks Consensus Estimate is $130 million, indicating 9.2% growth from the prior-year quarter.
Further, MIS division’s another revenue source — Financial Institutions — is anticipated to report $110 million of revenues, up 7.8% from the prior-year quarter. However, Public, Project and Infrastructure Finance unit revenues are projected to either remain stable or decline marginally year over year to $104 million as municipal bond issuance slowed in the to-be-reported quarter.
Overall, the MIS division is projected to witness year-over-year growth in the top line. The Zacks Consensus Estimate for the division’s revenues is $719 million, reflecting an increase of 4.7%.
Other Factors at Play
Higher revenues from Moody's Analytics (“MA”) division: Moody’s continues to pursue growth in areas outside the core credit ratings service. Given the rise in demand for analytics, the company’s MA division is expected to witness a rise in revenues. All three business units at the division are anticipated to witness higher revenues in the to-be-reported quarter. The Zacks Consensus Estimate for the division’s revenues of $434 million indicates a surge of 38.2% from the prior-year quarter.
Strategic deals/investments to support revenues: Moody’s is likely to witness revenue growth on the back of its strategic acquisitions and investments. These have increased the scale and cross-selling opportunities across products and vertical markets.
Expenses to remain high: As Moody’s continues with its inorganic growth strategy, acquisition and restructuring costs are expected to remain high. So, overall expenses are anticipated to rise during the quarter.
Now, let’s see what our quantitative model predicts.
According to our quantitative model, chances of Moody’s beating the Zacks Consensus Estimate in the second quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Moody’s is +0.97%.
Zacks Rank: Moody’s currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for earnings of $1.88 for the to-be-reported quarter has been revised 1.1% upward over the past 30 days. Also, the figure reflects a year-over-year improvement of 24.5%. Further, the consensus estimate for sales of $1.15 billion for the second quarter reflects 14.8% growth from the prior-year quarter.
Moody's Corporation Price and EPS Surprise
Moody's Corporation Price and EPS Surprise | Moody's Corporation Quote
Other Stocks to Consider
A few stocks from the finance space worth a look are Comerica Incorporated (CMA - Free Report) , T. Rowe Price Group, Inc. (TROW - Free Report) and Ally Financial Inc. (ALLY - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comerica’s Zacks Consensus Estimate for current-year earnings has been revised 5.3% upward over the past 60 days.
T. Rowe Price’s earnings estimates for the current year have been revised upward by 1.8% over the past 60 days.
Ally Financial has witnessed a marginal upward earnings estimate revision for the current year over the past 60 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>