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Moody's (MCO) Q2 Earnings & Revenues Beat, 2023 View Up
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Moody's (MCO - Free Report) reported second-quarter 2023 adjusted earnings of $2.30 per share, which handily beat the Zacks Consensus Estimate of $2.23. The bottom line also grew 4% from the year-ago quarter figure.
Gradual improvement in global bond issuance volumes and steady demand for analytics supported Moody’s results. The company’s liquidity position was robust during the quarter. However, an increase in operating expenses was a headwind.
After taking into consideration certain non-recurring items, net income attributable to Moody's was $377 million or $2.05 per share, up from $327 million or $1.77 per share in the prior-year quarter.
Revenues Up, Costs Rise
Quarterly revenues were $1.49 billion, which outpaced the Zacks Consensus Estimate of $1.38 billion. The top line grew 8% year over year. Foreign currency translation had an immaterial impact on revenues.
Total expenses were $944 million, up 8%.
Adjusted operating income of $653 million was up 5%. Adjusted operating margin was 43.7%, down from 44.9% a year ago.
Decent Segment Performance
Moody’s Investors Service revenues grew 6% year over year to $747 million. The improvement was mainly driven by a modest uptick in capital market activities.
Moody’s Analytics revenues grew 11% to $747 million. This was mainly driven by the steady demand for Know Your Customer solutions and credit research. Foreign currency translation favorably impacted the segment’s revenues by 1%.
Strong Balance Sheet
As of Jun 30, 2023, Moody’s had total cash, cash equivalents and short-term investments of $2.34 billion, up from $1.86 billion as of Dec 31, 2022.
The company had $7.2 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.
Share Repurchase Update
During the quarter, Moody's repurchased 0.2 million shares at an average price of $314.25 per share.
Upbeat 2023 Guidance
Moody’s now expects adjusted earnings in the range of $9.75-$10.25 per share, up from the earlier projection of $9.50-$10.00. On a GAAP basis, earnings are projected within $8.70-$9.20 per share, rising from the prior target of $8.45-$8.95.
Moody’s now projects revenues to increase in the high-single-digit percent range, a change from the mid-to-high-single-digit percent range previously projected.
Operating expenses are expected to rise in the mid-single-digit percent range.
Our Viewpoint
Moody’s remains well-positioned for growth on the back of a solid market position, strength in diverse operations and strategic acquisitions. However, elevated operating expenses and geopolitical and macroeconomic concerns are likely to hurt its financials.
Moody's Corporation Price, Consensus and EPS Surprise
Earnings Dates & Expectations of Other Finance Stocks
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Jul 26.
Over the past 30 days, the Zacks Consensus Estimate for RJF’s quarterly earnings has been revised 1.9% lower to $2.07, suggesting a 28.6% surge from the prior-year reported number.
LPL Financial (LPLA - Free Report) is slated to announce second quarter 2023 numbers on Jul 27.
Over the past 30 days, the Zacks Consensus Estimate for LPLA’s quarterly earnings has moved 4% lower to $3.88, implying a 73.2% jump from the prior-year reported number.
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Moody's (MCO) Q2 Earnings & Revenues Beat, 2023 View Up
Moody's (MCO - Free Report) reported second-quarter 2023 adjusted earnings of $2.30 per share, which handily beat the Zacks Consensus Estimate of $2.23. The bottom line also grew 4% from the year-ago quarter figure.
Gradual improvement in global bond issuance volumes and steady demand for analytics supported Moody’s results. The company’s liquidity position was robust during the quarter. However, an increase in operating expenses was a headwind.
After taking into consideration certain non-recurring items, net income attributable to Moody's was $377 million or $2.05 per share, up from $327 million or $1.77 per share in the prior-year quarter.
Revenues Up, Costs Rise
Quarterly revenues were $1.49 billion, which outpaced the Zacks Consensus Estimate of $1.38 billion. The top line grew 8% year over year. Foreign currency translation had an immaterial impact on revenues.
Total expenses were $944 million, up 8%.
Adjusted operating income of $653 million was up 5%. Adjusted operating margin was 43.7%, down from 44.9% a year ago.
Decent Segment Performance
Moody’s Investors Service revenues grew 6% year over year to $747 million. The improvement was mainly driven by a modest uptick in capital market activities.
Moody’s Analytics revenues grew 11% to $747 million. This was mainly driven by the steady demand for Know Your Customer solutions and credit research. Foreign currency translation favorably impacted the segment’s revenues by 1%.
Strong Balance Sheet
As of Jun 30, 2023, Moody’s had total cash, cash equivalents and short-term investments of $2.34 billion, up from $1.86 billion as of Dec 31, 2022.
The company had $7.2 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.
Share Repurchase Update
During the quarter, Moody's repurchased 0.2 million shares at an average price of $314.25 per share.
Upbeat 2023 Guidance
Moody’s now expects adjusted earnings in the range of $9.75-$10.25 per share, up from the earlier projection of $9.50-$10.00. On a GAAP basis, earnings are projected within $8.70-$9.20 per share, rising from the prior target of $8.45-$8.95.
Moody’s now projects revenues to increase in the high-single-digit percent range, a change from the mid-to-high-single-digit percent range previously projected.
Operating expenses are expected to rise in the mid-single-digit percent range.
Our Viewpoint
Moody’s remains well-positioned for growth on the back of a solid market position, strength in diverse operations and strategic acquisitions. However, elevated operating expenses and geopolitical and macroeconomic concerns are likely to hurt its financials.
Moody's Corporation Price, Consensus and EPS Surprise
Moody's Corporation price-consensus-eps-surprise-chart | Moody's Corporation Quote
Currently, Moody’s carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Finance Stocks
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Jul 26.
Over the past 30 days, the Zacks Consensus Estimate for RJF’s quarterly earnings has been revised 1.9% lower to $2.07, suggesting a 28.6% surge from the prior-year reported number.
LPL Financial (LPLA - Free Report) is slated to announce second quarter 2023 numbers on Jul 27.
Over the past 30 days, the Zacks Consensus Estimate for LPLA’s quarterly earnings has moved 4% lower to $3.88, implying a 73.2% jump from the prior-year reported number.