On Jul 11, 2013, Zacks Investment Research upgraded Moody’s Corp. (MCO) to a Zacks Rank #1 (Strong Buy). With a strong return of 70.4% over the past one year and a positive estimate revision trend, Moody’s is an attractive investment opportunity.
Why the Upgrade?
Upbeat first quarter results, strength in new domestic debt issuance and improving clarity over regulatory climate in Europe contributed to the upgrade. Moody’s remains a solid franchise in rating debt instruments based on its diversified credit research business model and international growth opportunities.
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, up 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.
The Zacks Consensus Estimate for fiscal 2013 increased 2.6% to $3.58 per share as most of the estimates were revised higher over the last 90 days. The current estimate is within the guidance range provided by Moody’s. For fiscal 2014, the Zacks Consensus Estimate increased 2.4% to $3.90 per share.
The long-term expected earnings growth rate for Moody’s is 13.9%.
Other Stocks to Consider:
Investors can also consider other stocks that are doing well right now. These include Akamai Technologies (AKAM), Energizer Holdings (ENR) and CIT Group (CIT). While Akamai and Energizer carry a Zacks Rank #1 (Strong Buy), CIT carries a Zacks Rank #2 (Buy).
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