Back to top

Image: Shutterstock

Decent Bond Issuance Volume to Aid Moody's (MCO) Q2 Earnings

Read MoreHide Full Article

Moody's (MCO - Free Report) is scheduled to report second-quarter 2021 results on Jul 28, before the opening bell. The company’s Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division, is likely to have recorded solid revenues in the quarter, owing to decent bond issuance volume.

Lower interest rates kept supporting debt issuances in the to-be-reported quarter. Though global investment-grade bond issuance volume was down (compared with a record level in the prior year), leveraged loan and high-yield bond issuance volumes recorded robust growth. The Zacks Consensus Estimate for revenues from the Corporate Finance line is pegged at $482 million, which indicates 15.7% fall from the prior-year quarter’s reported number.

The quarterly issuance volumes for residential mortgage-backed securities, asset-backed securities and collateral debt obligation were impressive. Thus, growth in Structured Finance revenues is likely to have been solid. The consensus estimate for the same stands at $119 million, suggesting 46.9% jump on a year-over-year basis.

The consensus estimate for Financial Institutions business line of $153 million implies 7.7% growth. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business of $143 million suggests a 7.5% rise.

The consensus estimate for the MIS division’s revenues of $903 million indicates 3.7% fall.

Other Key Factors at Play

Support From Moody's Analytics (“MA”) Division: With demand for analytics rising, revenues from all units at the MA division are expected to have increased in the second quarter. The company’s efforts to strengthen the division’s profitability through inorganic growth strategies might have offered some support as well. Thus, the division’s overall revenues might have risen in the to-be-reported quarter.

The consensus estimate for the division’s revenues of $562 million reflects 13.1% growth from the prior-year quarter.

High Expenses: Given Moody’s inorganic growth efforts, charges related to strategic acquisition and restructuring costs might have increased in the to-be-reported quarter. Hence, overall expenses are likely to have been elevated.

Earnings Whispers

Our quantitative model predicts an earnings beat for Moody’s in the second quarter of 2021. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.

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 +2.44%.

Zacks Rank: Moody’s currently carries a Zacks Rank #3.
 

Moodys Corporation Price and EPS Surprise

Moodys Corporation Price and EPS Surprise

 

Moodys Corporation price-eps-surprise | Moodys Corporation Quote

The Zacks Consensus Estimate for the company’s earnings of $2.76 for the to-be-reported quarter has moved 1.1% upward over the past seven days. The figure indicates a decline of 1.8% from the year-ago reported number.

The consensus estimate for sales of $1.49 billion suggests a 3.6% increase.

 

Other Stocks Worth a Look

Here are some other finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

The Earnings ESP for Prosperity Bancshares, Inc. (PB - Free Report) is +1.52% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report quarterly numbers on Jul 28.

T. Rowe Price Group (TROW - Free Report) is scheduled to release earnings on Jul 29. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.34%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Huntington Bancshares (HBAN - Free Report) is slated to report quarterly results on Jul 29. The company currently has an Earnings ESP of +1.42% and a Zacks Rank of 3.

Published in