Moody's (MCO Quick QuoteMCO - Free Report) is scheduled to announce fourth-quarter and full-year 2024 results on Feb. 13, 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 solid revenue growth.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Global issuance activity was decent in the fourth quarter, driven by corporate debt spread at near historical lows and a favorable economic backdrop, with December witnessing seasonally slow volumes.

Two of the three sub-categories within non-financial corporate bonds (leveraged loans and high yield) witnessed robust volumes on a year-over-year basis, while investment-grade bond activity was subdued. The Zacks Consensus Estimate for revenues from the Corporate Finance line of $422.8 million indicates a 25.5% jump from the prior-year quarter’s reported number.
 
The consensus estimate for revenues from the Financial Institutions business line of $147 million suggests an 11.4% increase. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business revenues of $129.3 million implies growth of 23.2%.

Quarterly issuance volumes for commercial mortgage-backed securities and collateral debt obligations were robust. On the other hand, asset-backed securities issuance was strong in October, with a steady decline in the next two months. Nonetheless, Structured Finance revenues are likely to have been favorably impacted. The consensus estimate for the same stands at $127.1 million, suggesting a 24.6% rise.

The Zacks Consensus Estimate for MIS division revenues for the to-be-reported quarter of $879.5 million implies a 20.2% year-over-year increase. Management anticipates MIS segment revenues to increase in the high-20s percent range in 2024. Global MIS-rated issuance is expected to increase in the mid-30s percent range for the 2024.

Moody’s Other Key Factors & Estimates for Q4

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 fourth 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 likely to have risen in the to-be-reported quarter.

Management anticipates revenues to rise in the high single-digit percentage range for 2024.

The consensus estimate for the MA division’s quarterly revenues is pegged at $861.3 million, indicating a 7.8% increase from the prior year quarter.

Expenses: Given Moody’s inorganic growth efforts, charges related to strategic acquisitions and restructuring costs, overall expenses are expected to have increased in the to-be-reported quarter.

Earnings Whispers for Moody’s

According to our proven model, the chances of Moody’s beating the Zacks Consensus Estimate for earnings this time are high. This is because it has 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 are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Moody’s is +0.19%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Q4 Earnings and Sales Expectations for MCO

The Zacks Consensus Estimate for earnings is pegged at $2.60, which has remained unchanged over the past seven days. The figure indicates an 18.7% rise from the year-ago reported number.

The consensus estimate for sales of $1.70 billion suggests 14.6% growth.

Management Guidance for 2024

Driven by impressive third-quarter performance, Moody’s guided adjusted earnings to be in the range of $11.90-$12.10 per share.

On a GAAP basis, earnings are projected to be within $10.85-$11.05 per share.

Moody’s projected revenues to increase in the high-teens percent range.

Management expects operating expenses to rise roughly 10%.

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 anticipated 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 targeted share repurchases worth almost $1.3 billion.

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

Other Finance Sector Stocks Worth a Look

Here are a couple of other finance sector 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 Robinhood Markets Inc. (HOOD Quick QuoteHOOD - Free Report) is +4.40% and it sports a Zacks Rank #1 (Strong Buy) at present. The company is slated to report fourth-quarter and full-year 2024 results on Feb. 12.

Over the past seven days, the Zacks Consensus Estimate for HOOD’s quarterly earnings has been revised 2.4% upward to 42 cents.

First American Financial Corporation (FAF Quick QuoteFAF - Free Report) is scheduled to release fourth-quarter and full-year 2024 earnings on Feb. 13. The company, which also sports a Zacks Rank #1 at present, has an Earnings ESP of +5.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quarterly earnings estimates for FAF have remained unchanged at $1.07 over the past week.