It has been about a month since the last earnings report for Moody's (MCO Quick QuoteMCO - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Moody's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Moody's Q3 Earnings Beat Estimates on Solid Bond Issuance Volume

Moody's reported third-quarter 2024 adjusted earnings of $3.21 per share, which handily outpaced the Zacks Consensus Estimate of $2.89. The bottom line surged 32% from the year-ago quarter figure.

Robust 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 posed a headwind.

After considering certain non-recurring items, net income attributable to Moody's was $534 million or $2.93 per share, up from $389 million or $2.11 per share in the prior-year quarter.

Revenues Up, Costs Rise

Quarterly revenues were $1.81 billion, which beat the Zacks Consensus Estimate of $1.73 billion. Also, the top line jumped 23% year over year.

Total expenses were $1.08 billion, up 15% year over year.

Adjusted operating income of $867 million soared 32%. Adjusted operating margin was 47.8%, rising from 44.6% a year ago.

Segment Performance Solid

Moody’s Investors Service revenues surged 41% year over year to $982 million. The rise was driven by solid Corporate Finance and improvement in Structured Finance revenues.

Moody’s Analytics revenues increased 7% to $831 million. Robust demand for Moody’s proprietary data and unique analytical insights contributed to this rise.

Balance Sheet Strong

As of Sept. 30, 2024, Moody’s had total cash, cash equivalents and short-term investments of $3.22 billion, up from $2.19 billion as of Dec 31, 2023.

The company had $6.88 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.

Update on Share Repurchases

During the quarter, Moody's repurchased 0.9 million shares at an average price of $464.77.

2024 Guidance

Driven by impressive third-quarter performance, Moody’s now expects adjusted earnings to be in the range of $11.90-$12.10 per share, higher than the previous guidance of $11.00-$11.40.

On a GAAP basis, earnings are now projected to be within $10.85-$11.05 per share. Earlier, management expected GAAP earnings to be between $9.95 and $10.35.

Moody’s now projects revenues to increase in the high-teens percent range, higher than the prior target of the low-teens percent.

Operating expenses are expected to rise roughly 10%, a change from the high-single-digit percent range.

Net interest expenses are estimated to be nearly $245 million. Depreciation and amortization expenses are expected to rise 6.1%.

Adjusted operating margin is expected to be 47-48%. The operating margin is likely to be 40-41%.

Moody’s expects cash flow from operations of roughly $2.7 billion. Free cash flow is projected to be almost $2.3 billion.

The company will likely repurchase shares worth almost $1.3 billion.

The effective tax rate is projected to be 23-24%.

Segment Outlook for 2024

MIS segment revenues are anticipated to increase in the high-20s percent range. The company previously projected segment revenues to rise in the high-teens percent range.

Adjusted operating margin is expected to be 59-60%.

Global MIS-rated issuance is expected to increase in mid-30s percent range.

Coming to the MA segment, Moody’s anticipates revenues to rise in the high-single-digit percentage range.

Adjusted operating margin is expected to be 30-31%. Further, the segment’s organic Annualized Recurring Revenue (ARR) is projected to rise in the high-single-digit to low-double-digit percent range.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Moody's has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Moody's has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Moody's is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Blackstone Inc. (BX Quick QuoteBX - Free Report) , a stock from the same industry, has gained 10.9%. The company reported its results for the quarter ended September 2024 more than a month ago.

Blackstone Inc. reported revenues of $2.43 billion in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $1.01 for the same period compares with $0.94 a year ago.

Blackstone Inc. is expected to post earnings of $1.45 per share for the current quarter, representing a year-over-year change of +30.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.

Blackstone Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.