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4 Reasons to Add Moody's (MCO) to Your Portfolio Right Now
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Moody's (MCO - Free Report) continues to be a leading provider of credit ratings, research, data & analytical tools, software solutions, along with 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 strategic acquisitions.
However, litigation issues, stiff competition across the credit rating industry and rising operating costs, among others, are major near-term headwinds for Moody’s. Despite these, this Zacks Rank #2 (Buy) stock seems like a solid investment option at the moment as it has been witnessing upward estimate revisions.
The Zacks Consensus Estimate for 2020 and 2021 earnings has been marginally revised upward over the past 60 days. This reflects analysts’ optimism regarding the company’s earnings growth potential.
Also, shares of Moody’s have surged 47.2% over the past year, outperforming the industry’s 19.5% rally.
Here are the reasons why Moody’s is worth betting on now:
Revenue Strength: Moody’s remains focused on enhancing revenue growth. The company has increased exposure to the banking and insurance industry, branching into the emerging and fast-growing professional services as well as enterprise risk solutions sectors.
Also, a rising share of the analytics business, which is not correlated with the volatility of interest rates, has added stability to top-line growth. The company’s top line has witnessed a five-year (2015-2019) CAGR of 8.5%.
Though sales are projected to decline 1.3% in 2020, the same is likely to rise 8.2% year over year in 2021.
Synergies From Acquisitions: Moody’s growth has been reflected in several successful acquisitions over the past few years. These strategic deals have provided it with increased scale and cross-selling opportunities across products and vertical markets. The company continues to pursue opportunistic deals, which are strategic fits and diversify the revenue base.
Earnings Growth: Over the past three to five years, Moody’s has witnessed earnings growth of 17.2%, significantly above the industry average of 11%. Further, the company’s earnings are projected to grow 1% in 2020 and 12.6% in 2021.
Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors in the long run.
Strong Balance Sheet: As of Mar 31, 2020, Moody’s had a total debt worth $6.8 billion, an undrawn revolving credit facility of $1 billion, and cash and cash equivalents of $2.1 billion. Its current total debt to total capital of 89.6%, which registered a sequential increase, is significantly higher than the industry average of 65.8%. Nevertheless, the company has debt maturities worth nearly $1.3 billion through 2021. Also, its times-interest earned of 11.0 at first quarter-end improved from the prior quarter. These imply that the company has lower credit risk and will likely be able to meet near-term debt obligations even if the economic situation worsens.
Other Stocks Worth a Look
Central Valley Community Bancorp’s 2020 earnings estimates have been revised 8.8% upward over the past 30 days. This Zacks Rank #2 company’s shares have gained 3.9% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Encore Capital Group Inc.’s (ECPG - Free Report) earnings estimates for the current year have been unchanged over the past 30 days. Over the past three months, this Zacks #2 Ranked company’s shares have gained 16.3%.
Earnings estimates for the ongoing year for GAIN Capital Holdings, Inc. have moved significantly north over the past 30 days. The company’s shares have gained 5.7% over the past three months. It carries a Zacks Rank of 2 at present.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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4 Reasons to Add Moody's (MCO) to Your Portfolio Right Now
Moody's (MCO - Free Report) continues to be a leading provider of credit ratings, research, data & analytical tools, software solutions, along with 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 strategic acquisitions.
However, litigation issues, stiff competition across the credit rating industry and rising operating costs, among others, are major near-term headwinds for Moody’s. Despite these, this Zacks Rank #2 (Buy) stock seems like a solid investment option at the moment as it has been witnessing upward estimate revisions.
The Zacks Consensus Estimate for 2020 and 2021 earnings has been marginally revised upward over the past 60 days. This reflects analysts’ optimism regarding the company’s earnings growth potential.
Also, shares of Moody’s have surged 47.2% over the past year, outperforming the industry’s 19.5% rally.
Here are the reasons why Moody’s is worth betting on now:
Revenue Strength: Moody’s remains focused on enhancing revenue growth. The company has increased exposure to the banking and insurance industry, branching into the emerging and fast-growing professional services as well as enterprise risk solutions sectors.
Also, a rising share of the analytics business, which is not correlated with the volatility of interest rates, has added stability to top-line growth. The company’s top line has witnessed a five-year (2015-2019) CAGR of 8.5%.
Though sales are projected to decline 1.3% in 2020, the same is likely to rise 8.2% year over year in 2021.
Synergies From Acquisitions: Moody’s growth has been reflected in several successful acquisitions over the past few years. These strategic deals have provided it with increased scale and cross-selling opportunities across products and vertical markets. The company continues to pursue opportunistic deals, which are strategic fits and diversify the revenue base.
Earnings Growth: Over the past three to five years, Moody’s has witnessed earnings growth of 17.2%, significantly above the industry average of 11%. Further, the company’s earnings are projected to grow 1% in 2020 and 12.6% in 2021.
Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors in the long run.
Strong Balance Sheet: As of Mar 31, 2020, Moody’s had a total debt worth $6.8 billion, an undrawn revolving credit facility of $1 billion, and cash and cash equivalents of $2.1 billion. Its current total debt to total capital of 89.6%, which registered a sequential increase, is significantly higher than the industry average of 65.8%. Nevertheless, the company has debt maturities worth nearly $1.3 billion through 2021. Also, its times-interest earned of 11.0 at first quarter-end improved from the prior quarter. These imply that the company has lower credit risk and will likely be able to meet near-term debt obligations even if the economic situation worsens.
Other Stocks Worth a Look
Central Valley Community Bancorp’s 2020 earnings estimates have been revised 8.8% upward over the past 30 days. This Zacks Rank #2 company’s shares have gained 3.9% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Encore Capital Group Inc.’s (ECPG - Free Report) earnings estimates for the current year have been unchanged over the past 30 days. Over the past three months, this Zacks #2 Ranked company’s shares have gained 16.3%.
Earnings estimates for the ongoing year for GAIN Capital Holdings, Inc. have moved significantly north over the past 30 days. The company’s shares have gained 5.7% over the past three months. It carries a Zacks Rank of 2 at present.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>