A month has gone by since the last earnings report for Moody's (MCO Quick QuoteMCO - Free Report) . Shares have lost about 1% in that time frame, outperforming the S&P 500.

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

Moody's Q3 Earnings Beat Estimates on Y/Y Revenue Growth

Moody's reported third-quarter 2025 adjusted earnings of $3.92 per share, which outpaced the Zacks Consensus Estimate of $3.70. The bottom line grew 22.1% from the year-ago quarter.

The results were primarily aided by an improvement in revenues. Steady demand for analytics and robust performance of the Moody’s Investors Service segment supported the results. The company’s liquidity position was strong in the quarter. However, an increase in operating expenses posed a headwind.

After considering certain non-recurring items, net income attributable to Moody's was $646 million or $3.60 per share, up from $534 million or $2.93 per share in the prior-year quarter.

Revenues Improve, Costs Rise

Revenues were $2.01 billion, which surpassed the Zacks Consensus Estimate of $1.96 billion. Also, the top line rose 10.7% year over year.

Total expenses were $1.09 billion, up 1.4% year over year.

Adjusted operating income of $1.06 billion rose 22.5% year over year. The adjusted operating margin was 52.9%, rising from 47.8% a year ago.

Segment Performance Strong

Moody’s Investors Service revenues increased 11.8% year over year to $1.10 billion. The rise was driven by strength in Corporate Finance, Financial Institutions, Structured Finance, and Public, Project and Infrastructure Finance revenues.

Moody’s Analytics revenues rose 9.4% year over year to $909 million. The rise was driven by 11% growth in Decision Solutions, a 7% rise in Research and Insights, and a 9% rise in Data & Information.

Balance Sheet Solid

As of Sept. 30, 2025, Moody’s had total cash, cash equivalents and short-term investments of $2.26 billion, down from $2.97 billion as of Dec. 31, 2024.

The company had $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.

Share Repurchase Update

In the quarter, Moody’s repurchased 1 million shares at an average price of $503.66.

As of Sept. 30, 2025, $398 million of share repurchase authorization was available.

2025 Guidance

Moody’s expects adjusted earnings of $14.50-$14.75 per share, changed from the prior target of $13.50-$14.00. 

On a GAAP basis, earnings are projected to be $13.15-$13.40 per share, changed from the earlier mentioned $12.25-$12.75.

Moody’s projects revenues to increase in the high-single-digit percent range, changed from the previous range of mid-single-digit.

Net interest expenses are estimated to be $215-$225 million, changed from the prior range of $220-$240 million.

The adjusted operating margin is expected to be 51%, changed from the previously mentioned 49-50%. The operating margin is likely to be 43-44%, changed from the prior outlook of 42-43%.

Moody’s expects the cash flow from operations to be $2.85 billion, changed from the previously mentioned $2.65-$2.85 billion. The free cash flow is projected to be $2.50 billion, up from the previously stated $2.30-$2.50 billion.

The effective tax rate is projected to be 22-23%, changed from the previously mentioned 23-25%.

MIS segment revenues are expected to increase in the high-single-digit range, changed from the previous guidance of low to mid-single-digit range. The adjusted operating margin is expected to be 63-64%, up from the previously mentioned 61-62%.

Coming to the MA segment, Moody’s anticipates an adjusted operating margin of 33%, changed from the previously stated 32-33%.

Medium-Term Targets (Base Year: 2022 and to be Achieved by 2027-end)

Total revenues are projected to rise in the range of high-single to low-double-digit.

Adjusted operating margin is expected to be in the low-50s% range. 

Adjusted earnings are expected to grow in the low-to-mid-teens percentage range. 

Further, MIS and MS segment revenues are anticipated to jump in the range of high-single to low-double-digit percentages.

Additionally, in December 2024, Moody’s CEO approved a Strategic and Operational Efficiency Restructuring Program aimed at improving efficiency and focusing on growth areas. The initiative is expected to generate annual savings of $250–$300 million by consolidating functions, reducing staff, exiting leased office spaces and retiring legacy software. The program involves $170–$200 million in pre-tax personnel-related restructuring charges and an additional $30–$50 million in non-cash charges. It is projected to strengthen operating margins and support strategic investments, with substantial completion by the end of 2026 and related cash outlays continuing through 2027.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 7.98% due to these changes.

VGM Scores

At this time, Moody's has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% 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 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.