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Decent Global Bond Issuances to Aid Moody's (MCO) Q3 Earnings

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Moody's (MCO - Free Report) is scheduled to announce third-quarter 2023 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 decent revenue performance in the to-be-reported quarter.

The issuance activity started at a slower pace in July and August due to seasonality but picked up pace in September. All three sub-categories within non-financial corporate bonds (investment grade, high yield and leveraged loans) witnessed solid gains on a year-over-year basis. Likewise, financial institution issuance volume improved.

The Zacks Consensus Estimate for revenues from the Corporate Finance line of $341.9 million indicates a 23.4% rise from the prior-year quarter. The consensus estimate for revenues for the Financial Institutions business line of $128.8 million implies 18.1% growth.

The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business of $118.2 million suggests a 28.4% jump.

On the other hand, quarterly issuance volumes for residential mortgage-backed securities and collateral debt obligations were notably down, while asset-backed securities issuances were robust. Thus, Structured Finance revenues are likely to have been favorably impacted. The consensus estimate for the same stands at $101.9 million, suggesting an almost 1% rise.

The Zacks Consensus Estimate for MIS division revenues of $746.3 million implies 17.9% growth.

Other Factors to Influence Q3 Results

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 third 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 $769.1 million, indicating an 11.9% increase from the prior-year quarter.

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. Further, inflation is likely to have led to expense growth. Hence, overall expenses might have been elevated.

Earnings Whispers

According to our proven model, the chances of Moody’s beating the Zacks Consensus Estimate this time are low. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

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 -0.56%.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
 

Moody's Corporation Price and EPS Surprise

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 $2.38, which has moved marginally lower over the past seven days. The figure indicates a 28.7% rise from the year-ago reported number.

The consensus estimate for sales of $1.46 billion suggests 14.7% year-over-year growth.

Finance Stocks Worth a Look

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

The Earnings ESP for Prosperity Bancshares (PB - Free Report) is +1.50% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2023 results on Oct 25.

Over the past seven days, the Zacks Consensus Estimate for PB’s quarterly earnings has moved almost 1% lower.

First Citizens BancShares, Inc. (FCNCA - Free Report) is scheduled to release third-quarter 2023 earnings on Oct 26. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +3.85%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FCNCA’s quarterly earnings estimates have remained unchanged over the past week.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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