Since Moody's Corporation (NYSE:MCO) released its earnings in December 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 8.3% next year relative to the past 5-year average growth rate of 1.3%. Presently, with latest-twelve-month earnings at US$1.3b, we should see this growing to US$1.4b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Moody's in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Moody's to keep growing?
Longer term expectations from the 14 analysts covering MCO’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of MCO's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 8.4% based on the most recent earnings level of US$1.3b to the final forecast of US$1.7b by 2022. This leads to an EPS of $9.49 in the final year of projections relative to the current EPS of $6.84. In 2022, MCO's profit margin will have expanded from 29% to 33%.
Future outlook is only one aspect when you're building an investment case for a stock. For Moody's, I've put together three important factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Moody's worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Moody's is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Moody's? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.