Moody's Corporation

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MCO : NYSE : Services
$105.61 -0.02 | -0.02%
Today's Range: 105.46 - 106.04
Avg. Daily Volume: 1,047,100
08/24/16 - 10:32 AM ET

Financial Analysis


MOODY'S CORP's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. MOODY'S CORP is extremely liquid. Currently, the Quick Ratio is 2.50 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 81.15% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)928.9918.1
EBITDA ($mil)441.4447.2
EBIT ($mil)410.2419.3
Net Income ($mil)255.5261.7


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)2026.82047.5
Total Assets ($mil)5044.94999.5
Total Debt ($mil)3420.43106.1
Equity ($mil)-600.0-331.2


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin72.1373.43
EBITDA Margin47.5148.7
Operating Margin44.1645.67
Sales Turnover0.680.7
Return on Assets17.6218.86
Return on Equity0.00.0
Debt Q2 FY16 Q2 FY15
Current Ratio2.642.72
Debt/Capital1.211.12
Interest Expense35.430.7
Interest Coverage11.5913.66


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)192.25200.35
Div / share0.370.34
EPS1.31.28
Book value / share-3.12-1.65
Institutional Own % n/a n/a
Avg Daily Volume1046522.01236214.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 8564.94 for the Diversified Financial Services industry and a value on par with the S&P 500 average of 25.30. Normally, for additional comaprison, we would look at the price-to-book ratio; however, this company's price-to-book ratio is negative making the value useless for comparisons. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. After reviewing these and other key valuation criteria, MOODY'S CORP proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
MCO 23.37 Peers 8564.94   MCO 18.39 Peers 6737.94

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

MCO is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

MCO is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
MCO 20.42 Peers 14.05   MCO NM Peers 0.35

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

MCO is trading at a significant premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

MCO's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
MCO NM Peers 843.02   MCO -1.11 Peers 60.22

Neutral. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

MCO's P/B is negative making this valuation measure meaningless.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, MCO is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
MCO 5.82 Peers 993.86   MCO -0.91 Peers 9.21

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

MCO is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

MCO significantly trails its peers on the basis of sales growth

 

 

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