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Why Is Moody's (MCO) Down 1.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Moody's (MCO - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, 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 its most recent earnings report in order to get a better handle on the recent drivers for Moody's Corporation before we dive into how investors and analysts have reacted as of late.
Moody's reported first-quarter 2026 adjusted earnings of $4.33 per share, which outpaced the Zacks Consensus Estimate of $4.25. The bottom line grew 13% from the year-ago quarter.
The results primarily benefited from an improvement in revenues. Steady demand for analytics and the robust performance of the Moody’s Investors Service segment supported the results. The company’s liquidity position was strong in the quarter. An increase in operating expenses posed a headwind.
After considering certain non-recurring items, net income attributable to Moody's was $661 million, or $3.73 per share, up from $625 million, or $3.46 per share, in the prior-year quarter.
Revenues Improve, Costs Rise
Quarterly revenues were $2.08 billion, which surpassed the Zacks Consensus Estimate of $2.07 billion. The top line rose 8% year over year.
Total expenses were $1.16 billion, up 7% year over year.
Adjusted operating income of $1.1 billion rose 11% year over year. The adjusted operating margin was 53.2%, up from 51.7% a year ago.
Strong Quarterly Segment Performance
Moody’s Investors Service revenues increased 8% year over year to $1.15 billion. The rise was driven by strength in Corporate Finance, Financial Institutions, and Public, Project and Infrastructure Finance revenues, partially offset by lower revenues at Structured Finance.
Moody’s Analytics revenues rose 8% year over year to $928 million. The increase was driven by 7% growth in Decision Solutions, an 8% rise in Research and Insights, and a 10% jump in Data & Information.
Solid Balance Sheet
As of March 31, 2026, Moody’s had total cash, cash equivalents and short-term investments of $1.51 billion, down from $2.45 billion as of Dec. 31, 2025.
The company had $6.39 billion in outstanding long-term debt.
Share Repurchase Update
In the quarter, MCO repurchased 1.5 million shares.
2026 Guidance
Moody’s expects adjusted earnings in the range of $16.40-$17.00 per share. GAAP earnings are projected to be the band of $16.00-$16.60 per share, up from the prior target of $15.00-$15.60 per share.
Moody’s projects revenues to increase in the high-single-digit percent range.
Operating expenses are expected to be in the mid-single-digit range. Further, non-operating income is projected to be between $70 million and $90 million. Previously, the company expected non-operating expenses of $180-$200 million.
Net interest expenses are estimated to be $220-$240 million, higher than the prior target range of $210-$230 million.
The adjusted operating margin is expected to be 52-53%, while the operating margin is likely to be approximately 45%.
Moody’s expects the cash flow from operations to be $3.25-$3.45 billion. The free cash flow is projected to be in the $2.80-$3 billion range.
The effective tax rate is projected to be 23-25%.
2026 Segment Guidance
MIS segment revenues are expected to increase in the high-single-digit range. The adjusted operating margin is expected to be roughly 65%.
Coming to the MA segment, Moody’s anticipates revenues to rise in the mid-single-digit range, while Annualized Recurring Revenue (ARR) is expected to increase in the high-single-digit range. Further, an adjusted operating margin is expected to be 34-35%.
Strategic and Operational Efficiency Restructuring Program
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 (to be between $210-$230 million) continuing through 2027.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Moody's has a nice Growth Score of B, though it is lagging a lot 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 bottom 20% quintile for value investors.
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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Moody's has a Zacks Rank #3 (Hold). We expect an in-line 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, Applied Digital Corporation (APLD - Free Report) , a stock from the same industry, has gained 32.1%. The company reported its results for the quarter ended February 2026 more than a month ago.
Applied Digital Corporation reported revenues of $126.64 million in the last reported quarter, representing a year-over-year change of +139.3%. EPS of -$0.36 for the same period compares with -$0.16 a year ago.
For the current quarter, Applied Digital Corporation is expected to post a loss of $0.13 per share, indicating a change of -8.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -18.2% over the last 30 days.
Applied Digital Corporation 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.
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Why Is Moody's (MCO) Down 1.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Moody's (MCO - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, 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 its most recent earnings report in order to get a better handle on the recent drivers for Moody's Corporation before we dive into how investors and analysts have reacted as of late.
Moody’s Q1 Earnings Beat on Rising Analytics Demand & Higher Issuances
Moody's reported first-quarter 2026 adjusted earnings of $4.33 per share, which outpaced the Zacks Consensus Estimate of $4.25. The bottom line grew 13% from the year-ago quarter.
The results primarily benefited from an improvement in revenues. Steady demand for analytics and the robust performance of the Moody’s Investors Service segment supported the results. The company’s liquidity position was strong in the quarter. An increase in operating expenses posed a headwind.
After considering certain non-recurring items, net income attributable to Moody's was $661 million, or $3.73 per share, up from $625 million, or $3.46 per share, in the prior-year quarter.
Revenues Improve, Costs Rise
Quarterly revenues were $2.08 billion, which surpassed the Zacks Consensus Estimate of $2.07 billion. The top line rose 8% year over year.
Total expenses were $1.16 billion, up 7% year over year.
Adjusted operating income of $1.1 billion rose 11% year over year. The adjusted operating margin was 53.2%, up from 51.7% a year ago.
Strong Quarterly Segment Performance
Moody’s Investors Service revenues increased 8% year over year to $1.15 billion. The rise was driven by strength in Corporate Finance, Financial Institutions, and Public, Project and Infrastructure Finance revenues, partially offset by lower revenues at Structured Finance.
Moody’s Analytics revenues rose 8% year over year to $928 million. The increase was driven by 7% growth in Decision Solutions, an 8% rise in Research and Insights, and a 10% jump in Data & Information.
Solid Balance Sheet
As of March 31, 2026, Moody’s had total cash, cash equivalents and short-term investments of $1.51 billion, down from $2.45 billion as of Dec. 31, 2025.
The company had $6.39 billion in outstanding long-term debt.
Share Repurchase Update
In the quarter, MCO repurchased 1.5 million shares.
2026 Guidance
Moody’s expects adjusted earnings in the range of $16.40-$17.00 per share. GAAP earnings are projected to be the band of $16.00-$16.60 per share, up from the prior target of $15.00-$15.60 per share.
Moody’s projects revenues to increase in the high-single-digit percent range.
Operating expenses are expected to be in the mid-single-digit range. Further, non-operating income is projected to be between $70 million and $90 million. Previously, the company expected non-operating expenses of $180-$200 million.
Net interest expenses are estimated to be $220-$240 million, higher than the prior target range of $210-$230 million.
The adjusted operating margin is expected to be 52-53%, while the operating margin is likely to be approximately 45%.
Moody’s expects the cash flow from operations to be $3.25-$3.45 billion. The free cash flow is projected to be in the $2.80-$3 billion range.
The effective tax rate is projected to be 23-25%.
2026 Segment Guidance
MIS segment revenues are expected to increase in the high-single-digit range. The adjusted operating margin is expected to be roughly 65%.
Coming to the MA segment, Moody’s anticipates revenues to rise in the mid-single-digit range, while Annualized Recurring Revenue (ARR) is expected to increase in the high-single-digit range. Further, an adjusted operating margin is expected to be 34-35%.
Strategic and Operational Efficiency Restructuring Program
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 (to be between $210-$230 million) continuing through 2027.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Moody's has a nice Growth Score of B, though it is lagging a lot 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 bottom 20% quintile for value investors.
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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Moody's has a Zacks Rank #3 (Hold). We expect an in-line 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, Applied Digital Corporation (APLD - Free Report) , a stock from the same industry, has gained 32.1%. The company reported its results for the quarter ended February 2026 more than a month ago.
Applied Digital Corporation reported revenues of $126.64 million in the last reported quarter, representing a year-over-year change of +139.3%. EPS of -$0.36 for the same period compares with -$0.16 a year ago.
For the current quarter, Applied Digital Corporation is expected to post a loss of $0.13 per share, indicating a change of -8.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -18.2% over the last 30 days.
Applied Digital Corporation 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.