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Moody's (MCO) Misses on Q4 Earnings & Revenues, Stock Down
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Moody's (MCO - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.19 per share, which lagged the Zacks Consensus Estimate of $2.34. The bottom line, however, jumped 37% from the year-ago quarter figure.
Shares of MCO have lost almost 3% in pre-market trading on lower-than-expected quarterly performance.
Improvement in global bond issuance volumes and steady demand for analytics supported Moody’s results. The company’s liquidity position was robust during the quarter. Also, stable operating expenses posed a tailwind.
After taking into consideration certain non-recurring items, net income attributable to Moody's was $340 million or $1.85 per share, up from $246 million or $1.34 per share in the prior-year quarter.
For 2023, adjusted earnings of $9.90 per share missed the Zacks Consensus Estimate of $10.06 but grew 16% year over year. Net income attributable to Moody's (GAAP) was $1.61 billion or $8.73 per share, up from $1.37 billion or $7.44 per share in the prior-year quarter.
Revenues Up, Costs Stable
Quarterly revenues were $1.48 billion, which missed the Zacks Consensus Estimate of $1.49 billion. However, the top line grew 15% year over year.
For 2023, total revenues grew 8% to $5.92 billion. The top line marginally lagged the consensus estimate of $5.93 billion.
Total expenses were $982 million, relatively stable year over year.
Adjusted operating income of $631 million was up 32%. Adjusted operating margin was 42.6%, up from 37% a year ago.
Solid Segment Performance
Moody’s Investors Service revenues grew 19% year over year to $684 million. The improvement was mainly driven by solid Corporate Finance, a favorable mix in Public, Project and Infrastructure Finance and improvement in Structured Finance revenues.
Moody’s Analytics revenues increased 11% to $796 million. This was mainly driven by double-digit growth in all lines of business.
Strong Balance Sheet
As of Dec 31, 2023, Moody’s had total cash, cash equivalents and short-term investments of $2.19 billion, up from $1.86 billion as of Dec 31, 2022.
The company had $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.
Share Repurchase Update
During the quarter, Moody's repurchased 0.6 million shares at an average price of $346.8 per share.
Solid 2024 Guidance
Moody’s expects adjusted earnings to be in the range of $10.25-$11.00 per share. On a GAAP basis, earnings are projected within $9.45-$10.20 per share.
Moody’s projects revenues to increase in the high-single-digit to low-double-digit percent range.
Operating expenses are expected to rise in the mid-to-high-single-digit percent range.
Our Viewpoint
Moody’s remains well-positioned for growth on the back of a solid market position, strength in diverse operations and strategic acquisitions. However, elevated operating expenses and geopolitical and macroeconomic concerns are likely to hurt its financials.
Moody's Corporation Price, Consensus and EPS Surprise
Ares Capital Corporation’s (ARCC - Free Report) fourth-quarter 2023 core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 59 cents. The bottom line matched the prior-year quarter’s figure.
Results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt ARCC’s results to some extent.
The Carlyle Group Inc.’s (CG - Free Report) fourth-quarter 2023 post-tax distributable earnings per share of 86 cents beat the Zacks Consensus Estimate of 75 cents. However, the bottom line declined from $1.01 in the year-ago quarter.
CG’s results benefited from an increase in segment fee revenues and lower expenses. Further, an increase in assets under management balance acted as a tailwind. However, a fall in realized performance revenues was the undermining factor.
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Moody's (MCO) Misses on Q4 Earnings & Revenues, Stock Down
Moody's (MCO - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.19 per share, which lagged the Zacks Consensus Estimate of $2.34. The bottom line, however, jumped 37% from the year-ago quarter figure.
Shares of MCO have lost almost 3% in pre-market trading on lower-than-expected quarterly performance.
Improvement in global bond issuance volumes and steady demand for analytics supported Moody’s results. The company’s liquidity position was robust during the quarter. Also, stable operating expenses posed a tailwind.
After taking into consideration certain non-recurring items, net income attributable to Moody's was $340 million or $1.85 per share, up from $246 million or $1.34 per share in the prior-year quarter.
For 2023, adjusted earnings of $9.90 per share missed the Zacks Consensus Estimate of $10.06 but grew 16% year over year. Net income attributable to Moody's (GAAP) was $1.61 billion or $8.73 per share, up from $1.37 billion or $7.44 per share in the prior-year quarter.
Revenues Up, Costs Stable
Quarterly revenues were $1.48 billion, which missed the Zacks Consensus Estimate of $1.49 billion. However, the top line grew 15% year over year.
For 2023, total revenues grew 8% to $5.92 billion. The top line marginally lagged the consensus estimate of $5.93 billion.
Total expenses were $982 million, relatively stable year over year.
Adjusted operating income of $631 million was up 32%. Adjusted operating margin was 42.6%, up from 37% a year ago.
Solid Segment Performance
Moody’s Investors Service revenues grew 19% year over year to $684 million. The improvement was mainly driven by solid Corporate Finance, a favorable mix in Public, Project and Infrastructure Finance and improvement in Structured Finance revenues.
Moody’s Analytics revenues increased 11% to $796 million. This was mainly driven by double-digit growth in all lines of business.
Strong Balance Sheet
As of Dec 31, 2023, Moody’s had total cash, cash equivalents and short-term investments of $2.19 billion, up from $1.86 billion as of Dec 31, 2022.
The company had $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.
Share Repurchase Update
During the quarter, Moody's repurchased 0.6 million shares at an average price of $346.8 per share.
Solid 2024 Guidance
Moody’s expects adjusted earnings to be in the range of $10.25-$11.00 per share. On a GAAP basis, earnings are projected within $9.45-$10.20 per share.
Moody’s projects revenues to increase in the high-single-digit to low-double-digit percent range.
Operating expenses are expected to rise in the mid-to-high-single-digit percent range.
Our Viewpoint
Moody’s remains well-positioned for growth on the back of a solid market position, strength in diverse operations and strategic acquisitions. However, elevated operating expenses and geopolitical and macroeconomic concerns are likely to hurt its financials.
Moody's Corporation Price, Consensus and EPS Surprise
Moody's Corporation price-consensus-eps-surprise-chart | Moody's Corporation Quote
Currently, Moody’s carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Ares Capital Corporation’s (ARCC - Free Report) fourth-quarter 2023 core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 59 cents. The bottom line matched the prior-year quarter’s figure.
Results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt ARCC’s results to some extent.
The Carlyle Group Inc.’s (CG - Free Report) fourth-quarter 2023 post-tax distributable earnings per share of 86 cents beat the Zacks Consensus Estimate of 75 cents. However, the bottom line declined from $1.01 in the year-ago quarter.
CG’s results benefited from an increase in segment fee revenues and lower expenses. Further, an increase in assets under management balance acted as a tailwind. However, a fall in realized performance revenues was the undermining factor.