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With a market cap of $89.7 billion, New York-based Moody's Corporation (MCO) is a global integrated risk assessment firm, that provides credit ratings, research, data, and risk management solutions. It operates through two segments: Moody's Investors Service (MIS), which delivers credit ratings and analysis for various debt instruments, and Moody's Analytics (MA), offering financial and risk management solutions, including SaaS products and data analytics.
Companies worth more than $10 billion are generally labeled as “large-cap” stocks and Moody's fits this criterion perfectly. Moody's provides financial institutions, governments, and corporations with tools to assess and manage credit and economic risks.
Despite a 3.1% decline from its 52-week high of $503.95 reached on Nov. 27, shares of this credit ratings agency company have risen 1.2% over the past three months, lagging behind the Financial Select Sector SPDR Fund’s (XLF) 11.2% return over the same time frame.
In the longer term, MCO stock is up 24.9% on a YTD basis, underperforming XLF’s nearly 33% gain. Shares of MCO have gained 30.2% over the past 52 weeks, compared to XLF’s 38.4% return over the same time frame.
Yet, MCO has been trading above its 50-day and 200-day moving averages since last year despite a few fluctuations.
Despite reporting better-than-expected Q3 adjusted earnings of $3.21 per share and revenue of $1.8 billion, shares of MCO fell nearly 4% on Oct. 22 due to concerns about rising operating expenses, which increased 15% year-over-year, potentially impacting future profitability. Additionally, the market may have reacted cautiously to the revised 10% expense growth guidance, up from the prior high-single-digit range. However, on Nov. 21, the company acquired Numerated Growth Technologies to enhance its Lending Suite with a complete loan origination and monitoring solution. The move integrates Numerated’s AI-driven platform with Moody’s risk data and analytics expertise.
MCO has outpaced its rival, Intercontinental Exchange, Inc. (ICE), which saw a 21.5% increase on a YTD basis, But, the stock has lagged behind ICE's 37.6% gain over the past 52 weeks.
Despite MCO has underperformed the broader sector over the past year, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 20 analysts' coverage, and as of writing, MCO is trading below the mean price target of $496.94.
