Moody's Increases Sales but Misses Estimates on Earnings

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Moody's (NYS: MCO) reported earnings on Feb. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Moody's beat slightly on revenue and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share dropped significantly.

Gross margins grew, operating margins contracted, and net margins dropped.

Revenue details
Moody's tallied revenue of $567.1 million. The six analysts polled by S&P Capital IQ predicted a top line of $558.5 million. GAAP sales were 0.5% higher than the prior-year quarter's $564.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.43. The six earnings estimates compiled by S&P Capital IQ averaged $0.49 per share. GAAP EPS of $0.43 for Q4 were 27% lower than the prior-year quarter's $0.59 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 68.0%, 10 basis points better than the prior-year quarter. Operating margin was 30.3%, 460 basis points worse than the prior-year quarter. Net margin was 17.0%, 730 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $599.4 million. On the bottom line, the average EPS estimate is $0.68.

Next year's average estimate for revenue is $2.42 billion. The average EPS estimate is $2.62.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 884 members out of 1,042 rating the stock outperform, and 158 members rating it underperform. Among 391 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 336 give Moody's a green thumbs-up, and 55 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Moody's is hold, with an average price target of $38.83.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Moody's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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