We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Poor Global Bond Issuances to Hurt Moody's (MCO) Q3 Earnings
Read MoreHide Full Article
Moody's (MCO - Free Report) is scheduled to announce third-quarter 2022 results on Oct 25, 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 witnessed disappointing revenue performance in the to-be-reported quarter.
Rising interest rates, heightened market volatility due to geopolitical and macroeconomic concerns and widening credit spreads resulted in soft issuance volume across all categories of bonds in the third quarter.
Global high-yield corporate bond issuances, investment-grade bond issuances and leveraged loan volumes recorded a year-over-year decline. The Zacks Consensus Estimate for revenues from the Corporate Finance line of $314 million indicates a 2.5% decline from the prior quarter’s reported number.
Financial institution issuance activity was weak in the third quarter. The consensus estimate for revenues for the Financial Institutions business line of $132 million implies a 3.1% rise. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business of $110 million suggests a 1.7% sequential increase.
Quarterly issuance volumes for residential mortgage-backed securities, asset-backed securities and collateral debt obligations were subdued. Thus, Structured Finance revenues are likely to have been adversely impacted. The consensus estimate for the same stands at $108 million, suggesting a 12.2% decrease.
Thus, The Zacks Consensus Estimate for MIS division revenues of $770 million reflects a 2.8% growth on a sequential basis.
Other 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 are anticipated to have offered some support. Thus, the division’s overall revenues are expected to have risen in the to-be-reported quarter.
The consensus estimate for the MA division’s revenues is pegged at $712 million, indicating a 5.3% increase from the prior quarter.
High Expenses: Given Moody’s inorganic growth efforts, charges related to strategic acquisitions and restructuring costs are expected to have increased in the to-be-reported quarter. Hence, overall expenses are likely to have been elevated.
Earnings Whispers
Our quantitative model does not indicate an earnings beat for Moody’s in the third quarter. This is because it doesn’t have 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: The Earnings ESP for Moody’s is -1.98%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $2.06, which has moved almost 1% lower over the past seven days. The figure indicates a decline of 23.4% from the year-ago reported number.
The consensus estimate for sales of $1.35 billion suggests an 11.3% year-over-year fall.
Finance Stocks Worth a Look
A couple of 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 Trustmark Corporation (TRMK - Free Report) is +5.25% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 25.
Over the past 30 days, the Zacks Consensus Estimate for TRMK’s quarterly earnings has been revised 1.5% lower.
Image: Shutterstock
Poor Global Bond Issuances to Hurt Moody's (MCO) Q3 Earnings
Moody's (MCO - Free Report) is scheduled to announce third-quarter 2022 results on Oct 25, 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 witnessed disappointing revenue performance in the to-be-reported quarter.
Rising interest rates, heightened market volatility due to geopolitical and macroeconomic concerns and widening credit spreads resulted in soft issuance volume across all categories of bonds in the third quarter.
Global high-yield corporate bond issuances, investment-grade bond issuances and leveraged loan volumes recorded a year-over-year decline. The Zacks Consensus Estimate for revenues from the Corporate Finance line of $314 million indicates a 2.5% decline from the prior quarter’s reported number.
Financial institution issuance activity was weak in the third quarter. The consensus estimate for revenues for the Financial Institutions business line of $132 million implies a 3.1% rise. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business of $110 million suggests a 1.7% sequential increase.
Quarterly issuance volumes for residential mortgage-backed securities, asset-backed securities and collateral debt obligations were subdued. Thus, Structured Finance revenues are likely to have been adversely impacted. The consensus estimate for the same stands at $108 million, suggesting a 12.2% decrease.
Thus, The Zacks Consensus Estimate for MIS division revenues of $770 million reflects a 2.8% growth on a sequential basis.
Other 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 are anticipated to have offered some support. Thus, the division’s overall revenues are expected to have risen in the to-be-reported quarter.
The consensus estimate for the MA division’s revenues is pegged at $712 million, indicating a 5.3% increase from the prior quarter.
High Expenses: Given Moody’s inorganic growth efforts, charges related to strategic acquisitions and restructuring costs are expected to have increased in the to-be-reported quarter. Hence, overall expenses are likely to have been elevated.
Earnings Whispers
Our quantitative model does not indicate an earnings beat for Moody’s in the third quarter. This is because it doesn’t have 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: The Earnings ESP for Moody’s is -1.98%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Moody's Corporation Price and EPS Surprise
Moody's Corporation price-eps-surprise | Moody's Corporation Quote
The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $2.06, which has moved almost 1% lower over the past seven days. The figure indicates a decline of 23.4% from the year-ago reported number.
The consensus estimate for sales of $1.35 billion suggests an 11.3% year-over-year fall.
Finance Stocks Worth a Look
A couple of 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 Trustmark Corporation (TRMK - Free Report) is +5.25% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 25.
Over the past 30 days, the Zacks Consensus Estimate for TRMK’s quarterly earnings has been revised 1.5% lower.
Ameriprise Financial, Inc. (AMP - Free Report) is also scheduled to release third-quarter 2022 earnings on Oct 25. AMP, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.42%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMP’s quarterly earnings estimates have moved marginally lower over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.