Moody's Upgraded to Strong Buy

Zacks Equity Research
March 26, 2013

On Mar 21, 2013, Zacks Investment Research upgraded Moody’s Corp. (MCO) to a Zacks Rank #1 (Strong Buy). With a strong return of 23.4% over the past one year and a positive estimate revision trend, Moody’s is an attractive investment opportunity.

Why the Upgrade?

Upbeat fourth quarter results, strength in new domestic debt issuance and improving clarity over regulatory climate in Europe contributed to the upgrade. 

Moody’s reported fourth quarter results on Feb 8, 2013. Earnings of 70 cents per share jumped 62.8% from the year-ago quarter and were in line with the Zacks Consensus Estimate. This was the fourth consecutive quarter of positive earnings surprise with an average beat of 10.4%.

The better-than-expected earnings were primarily driven by 33.0% surge in revenues and 53.7% jump in operating income.

Based on the strong results, Moody’s provided optimistic guidance for fiscal 2013. Moody’s expects 2013 revenues to grow in the high single-digit percent range. Operating margin is projected to be between 46% and 47%. Earnings for 2013 are expected to be in the range of $3.45 to $3.55 per share.

The Zacks Consensus Estimate for fiscal 2013 increased 9.1% to $3.49 per share as most of the estimates were revised higher over the last 60 days. The current estimate is within the guidance range provided by Moody’s. For fiscal 2014, the Zacks Consensus Estimate increased 4.5% to $3.75 per share.

The long-term expected earnings growth rate for Moody’s is 14.0%.

Other Stocks to Consider:

Investors can also consider other financial services providers that are doing well right now. These include Euronet Worldwide Inc. (EEFT), SS&C Technologies Holdings (SSNC) and Fiserv Inc (FISV). While Euronet and SS&C Technologies carry a Zacks Rank #1 (Strong Buy), Fiserv carries a Zacks Rank #2 (Buy).

Read the Full Research Report on FISV

Read the Full Research Report on MCO

Read the Full Research Report on SSNC

Read the Full Research Report on EEFT

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