Shares of Moody’s Corp (MCO) reached a new 52-week high of $69.70 on Wednesday, May 22, 2013. The bullish run reflects Moody’s impressive first quarter results and an upbeat guidance.
The closing price of Moody’s on May 22 was $66.98, representing a strong one-year return of about 83.1% and a year-to-date return of about 29.4%. The S&P 500 jumped 25.3% and 13.2%, respectively during the same period. Average volume of shares traded over the last three months stands at approximately 1697.8K.
Moody’s delivered a positive earnings surprise of 10.7% over the past four quarters. This Zacks Rank #2 (Buy) stock has a market cap of $15.28 billion and a long-term expected earnings growth rate of 13.9%.
Impressive First Quarter, Positive Guidance
Moody’s reported first quarter earnings of 97 cents per share that were well ahead of the Zacks Consensus Estimate of 87 cents. However, including litigation expenses of 14 cents, earnings were 83 cents per share, which jumped 9.0% from the year-ago quarter.
Revenues surged 13.0% year over year to $731.8 million and exceeded the Zacks Consensus Estimate of $718.0 million. Domestic revenues soared 18.0% year over year to $406.1 million in the reported quarter. International revenues increased 8.0% year over year to $325.7 million in the quarter.
Moody’s expects 2013 revenues to grow in the high single-digit percent range. Operating expenses are projected to increase in the mid-single digit percent range. Operating margin is projected to be between 41% and 42%. Earnings for 2013 are expected to be in the range of $3.49 to $3.59 per share.
Key Growth Catalysts
We believe that Moody’s remains a solid franchise in rating debt instruments based on its diversified credit research business model and international growth opportunities. Moreover, strength in new domestic debt issuance and improving clarity over regulatory climate in Europe are positives. Additionally, aggressive share buyback will fuel further earnings growth going forward.
Estimate Revision
The Zacks Consensus Estimate has remained steady at 89 cents over the past 30 days. For fiscal 2013, the earnings estimate has jumped 2.0% (7 cents) to $3.58 cents per share over the past 30 days. For fiscal 2014, the earnings estimate has jumped 1.6% (6 cents) to $3.89 cents per share over the same period.
Other Stocks to Consider
Other stocks that are worth considering include FleetCor Technologies (FLT), McGraw Hill Financials (MHFI) and Euronet Worldwide (EEFT). Currently, FleetCor has a Zacks Rank #1 (Strong Buy), while both McGraw Hill and Euronet carry a Zacks Rank #2 (Buy).
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