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Moody's (MCO) Beats on Q2 Earnings & Revenues, Affirms View
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Moody's Corporation (MCO - Free Report) reported second-quarter 2018 adjusted earnings of $2.04 per share, which handily surpassed the Zacks Consensus Estimate of $1.88. Also, the bottom line improved 35% from the year-ago quarter.
Results were attributable to impressive revenue growth, reflecting strong issuance in the quarter. Also, both Moody’s Investors Service and Moody’s Analytics segments witnessed improved performance. However, higher expenses were on the downside.
After taking into consideration amortization of all acquisition-related intangible assets and acquisition-related expenses, Moody’s net income was $376.2 million or $1.94 per share. This compared favorably with net income of $312.2 million or $1.61 per share in the prior-year quarter.
Revenues & Costs Increase
Quarterly revenues of $1.18 billion beat the Zacks Consensus Estimate of $1.15 billion. Also, the top line increased 17% year over year. The quarter witnessed higher domestic and international revenues. Foreign currency translation favorably impacted the top line by 1%.
Total expenses were $641.1 million, up 18.6% from the prior-year quarter. Inclusion of Bureau van Dijk operating expenses and acquisition-related costs were the main reasons for the rise.
Adjusted operating income of $548.4 million jumped 17% year over year.
Adjusted operating margin came in at 49.7%, down from 49.9% in the year-ago quarter.
Segment Performance Improves in Q2
Moody’s Investors Service revenues increased 9.6% year over year to $752.3 million, driven by growth in U.S. revenues as well as international revenues. Foreign currency translation favorably impacted segment revenues by 1%
Corporate finance revenues improved, driven by strong bank loan issuance in the United States and Europe. Also, structured finance revenues witnessed a rise, mainly driven by strength in securitization markets.
Further, financial institutions’ revenues improved, primarily reflecting growth in issuance from EMEA banks and U.S. insurance companies. Also, the company recorded a rise in global public, project and infrastructure finance revenues due to an increase in EMEA infrastructure finance and sovereign and sub-sovereign issuers, partially offset by a decline in U.S. municipal issuance.
Moody’s Analytics revenues jumped 35% year over year to $422.8 million, mainly driven by higher non-U.S. revenues. Notably, foreign currency translation favorably impacted the segment’s revenues by 2%.
The segment recorded growth in research, data and analytics revenues, professional services revenues and Enterprise Risk Solutions revenues.
Balance Sheet
As of Jun 30, 2018, Moody’s had total cash, cash equivalents and short-term investments of $1.31 billion, up 22.7% from Dec 31, 2017 level. Further, Moody’s had $5.3 billion of outstanding debt and $910 million of additional borrowing capacity under its revolving credit facility.
Share Repurchases
During the reported quarter, the company repurchased 0.2 million shares for $37.6 million. As of Jun 30, 2018, Moody’s had nearly $450 million of share repurchase authorization left.
2018 Guidance Unchanged
Moody’s anticipates revenues to increase in the high-single-digit percent range. Operating expenses are projected to rise in the high-single-digit percent range.
Earnings per share are projected to be $7.20 to $7.40. Adjusted earnings are now expected to be $7.65 to $7.85.
Our Take
Moody’s performed decently in the quarter. The company remains well positioned for growth on the back of strong market position, strength in its diverse operations and strategic acquisitions. However, elevated expense levels, as it continues to invest in franchise and grow inorganically, will likely hurt bottom line.
Moody's Corporation Price, Consensus and EPS Surprise
Ares Capital Corporation (ARCC - Free Report) is slated to report on Aug 1, while LendingClub Corporation (LC - Free Report) will announce on Aug 7. Hercules Capital, Inc. (HTGC - Free Report) is slated to announce results on Aug 2.
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Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
Moody's (MCO) Beats on Q2 Earnings & Revenues, Affirms View
Moody's Corporation (MCO - Free Report) reported second-quarter 2018 adjusted earnings of $2.04 per share, which handily surpassed the Zacks Consensus Estimate of $1.88. Also, the bottom line improved 35% from the year-ago quarter.
Results were attributable to impressive revenue growth, reflecting strong issuance in the quarter. Also, both Moody’s Investors Service and Moody’s Analytics segments witnessed improved performance. However, higher expenses were on the downside.
After taking into consideration amortization of all acquisition-related intangible assets and acquisition-related expenses, Moody’s net income was $376.2 million or $1.94 per share. This compared favorably with net income of $312.2 million or $1.61 per share in the prior-year quarter.
Revenues & Costs Increase
Quarterly revenues of $1.18 billion beat the Zacks Consensus Estimate of $1.15 billion. Also, the top line increased 17% year over year. The quarter witnessed higher domestic and international revenues. Foreign currency translation favorably impacted the top line by 1%.
Total expenses were $641.1 million, up 18.6% from the prior-year quarter. Inclusion of Bureau van Dijk operating expenses and acquisition-related costs were the main reasons for the rise.
Adjusted operating income of $548.4 million jumped 17% year over year.
Adjusted operating margin came in at 49.7%, down from 49.9% in the year-ago quarter.
Segment Performance Improves in Q2
Moody’s Investors Service revenues increased 9.6% year over year to $752.3 million, driven by growth in U.S. revenues as well as international revenues. Foreign currency translation favorably impacted segment revenues by 1%
Corporate finance revenues improved, driven by strong bank loan issuance in the United States and Europe. Also, structured finance revenues witnessed a rise, mainly driven by strength in securitization markets.
Further, financial institutions’ revenues improved, primarily reflecting growth in issuance from EMEA banks and U.S. insurance companies. Also, the company recorded a rise in global public, project and infrastructure finance revenues due to an increase in EMEA infrastructure finance and sovereign and sub-sovereign issuers, partially offset by a decline in U.S. municipal issuance.
Moody’s Analytics revenues jumped 35% year over year to $422.8 million, mainly driven by higher non-U.S. revenues. Notably, foreign currency translation favorably impacted the segment’s revenues by 2%.
The segment recorded growth in research, data and analytics revenues, professional services revenues and Enterprise Risk Solutions revenues.
Balance Sheet
As of Jun 30, 2018, Moody’s had total cash, cash equivalents and short-term investments of $1.31 billion, up 22.7% from Dec 31, 2017 level. Further, Moody’s had $5.3 billion of outstanding debt and $910 million of additional borrowing capacity under its revolving credit facility.
Share Repurchases
During the reported quarter, the company repurchased 0.2 million shares for $37.6 million. As of Jun 30, 2018, Moody’s had nearly $450 million of share repurchase authorization left.
2018 Guidance Unchanged
Moody’s anticipates revenues to increase in the high-single-digit percent range. Operating expenses are projected to rise in the high-single-digit percent range.
Earnings per share are projected to be $7.20 to $7.40. Adjusted earnings are now expected to be $7.65 to $7.85.
Our Take
Moody’s performed decently in the quarter. The company remains well positioned for growth on the back of strong market position, strength in its diverse operations and strategic acquisitions. However, elevated expense levels, as it continues to invest in franchise and grow inorganically, will likely hurt bottom line.
Moody's Corporation Price, Consensus and EPS Surprise
Moody's Corporation Price, Consensus and EPS Surprise | 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.
Earnings Schedule of Other Stocks
Ares Capital Corporation (ARCC - Free Report) is slated to report on Aug 1, while LendingClub Corporation (LC - Free Report) will announce on Aug 7. Hercules Capital, Inc. (HTGC - Free Report) is slated to announce results on Aug 2.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>