Moody's Corporation Stock Buy Recommendation Reiterated (MCO)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Moody's Corporation (NYSE: MCO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:
  • Compared to other companies in the Diversified Financial Services industry and the overall market, MOODY'S CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MOODY'S CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MOODY'S CORP increased its bottom line by earning $3.03 versus $2.49 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $3.03).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 66.4% when compared to the same quarter one year prior, rising from $96.20 million to $160.10 million.
  • The gross profit margin for MOODY'S CORP is currently very high, coming in at 70.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.22% is above that of the industry average.

Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. Moody's has a market cap of $12.1 billion and is part of the services sector and diversified services industry. The company has a P/E ratio of 18.00, equal to the S&P 500 P/E ratio of 18.00. Shares are up 9% year to date as of the close of trading on Friday.

You can view the full Moody's Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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