On March 11, we upgraded
) to 'Outperform' based on its strong results in the fourth
quarter of fiscal 2012. The stock also has a Zacks Rank #1
Why the Upgrade?
Moody's fourth quarter revenues of $754.2 million surged 33.0%
from the year-ago quarter and fared better than the Zacks
Consensus Estimate of $689.0 million. The better-than-expected
result was driven by strong performance from both Moody's
Investors Service (MIS) and Moody's Analytics (MA) division.
The company's bottom-line also increased 62.8% year over year
to 70 cents per share, aided by solid margin expansion. The
company ended 2012 on a strong note, as both revenues and
earnings jumped approximately 20% each and margin expanded 50
basis points despite higher operating expense.
The company provided positive overall guidance primarily
reflecting strong quarterly results and improving U.S. corporate
finance market. Moody's expects 2013 revenues to grow in the
high-single-digit percent range. Operating expenses are projected
to increase in the low-single-digit percent range. Adjusted
operating margin is projected to be between 46% and 47%, while
GAAP operating margin is expected between 42% and 43%. Earnings
for 2013 are expected to be in the range of $3.45 to $3.55 per
share. The Zacks Consensus Estimate for the fiscal 2013 is pinned
at $3.49 per share.
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 are positives. Additionally, improving liquidity, higher
dividend payout and continuing share buybacks are the other
Other Stocks to Consider
Besides Moody's, other stocks in the sector that are currently
performing well include
), which has a Zacks Rank #1 (Strong Buy), and
), which currently has a Zacks Rank #2 (Buy).
) has a Zacks Rank #3 (Hold).
CIT GROUP (CIT): Free Stock Analysis Report
EURONET WORLDWD (EEFT): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
MONEYGRAM INTL (MGI): Free Stock Analysis
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