We assign a fundamental rating of 5 out of 10 to MCO. MCO was compared to 237 industry peers in the Capital Markets industry. MCO has an excellent profitability rating, but there are some minor concerns on its financial health. MCO is quite expensive at the moment. It does show a decent growth rate.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

MCO had positive earnings in the past year.
In the past year MCO had a positive cash flow from operations.
In the past 5 years MCO has always been profitable.
In the past 5 years MCO always reported a positive cash flow from operatings.

1.2 Ratios

MCO's Return On Assets of 14.56% is amongst the best of the industry. MCO outperforms 94.51% of its industry peers.
MCO has a better Return On Equity (56.71%) than 98.73% of its industry peers.
Looking at the Return On Invested Capital, with a value of 20.43%, MCO belongs to the top of the industry, outperforming 96.62% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MCO is significantly above the industry average of 7.27%.
The 3 year average ROIC (16.07%) for MCO is below the current ROIC(20.43%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	14.56%
ROE	56.71%
ROIC	20.43%

ROA(3y)11.28%

ROA(5y)12.65%

ROE(3y)53.57%

ROE(5y)71.04%

ROIC(3y)16.07%

ROIC(5y)17.25%

1.3 Margins

Looking at the Profit Margin, with a value of 29.92%, MCO is in the better half of the industry, outperforming 74.26% of the companies in the same industry.
In the last couple of years the Profit Margin of MCO has remained more or less at the same level.
With a decent Operating Margin value of 43.81%, MCO is doing good in the industry, outperforming 78.90% of the companies in the same industry.
MCO's Operating Margin has been stable in the last couple of years.
With an excellent Gross Margin value of 73.75%, MCO belongs to the best of the industry, outperforming 81.86% of the companies in the same industry.
MCO's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	43.81%
PM (TTM)	29.92%
GM	73.75%

OM growth 3Y-2.8%

OM growth 5Y-0.46%

PM growth 3Y-6.57%

PM growth 5Y-0.28%

GM growth 3Y-0.51%

GM growth 5Y0.36%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

MCO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, MCO has less shares outstanding
The debt/assets ratio for MCO has remained at the same level compared to a year ago.

2.2 Solvency

The Debt to FCF ratio of MCO is 2.91, which is a good value as it means it would take MCO, 2.91 years of fcf income to pay off all of its debts.
MCO's Debt to FCF ratio of 2.91 is fine compared to the rest of the industry. MCO outperforms 79.32% of its industry peers.
MCO has a Debt/Equity ratio of 1.76. This is a high value indicating a heavy dependency on external financing.
MCO's Debt to Equity ratio of 1.76 is on the low side compared to the rest of the industry. MCO is outperformed by 75.11% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.76
Debt/FCF	2.91
Altman-Z	N/A

ROIC/WACCN/A

WACCN/A

2.3 Liquidity

A Current Ratio of 1.84 indicates that MCO should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.84, MCO is in the better half of the industry, outperforming 72.15% of the companies in the same industry.
MCO has a Quick Ratio of 1.84. This is a normal value and indicates that MCO is financially healthy and should not expect problems in meeting its short term obligations.
MCO has a Quick ratio of 1.84. This is in the better half of the industry: MCO outperforms 72.15% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.84
Quick Ratio	1.84

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 15.60% over the past year.
MCO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.53% yearly.
MCO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.77%.
Measured over the past years, MCO shows a small growth in Revenue. The Revenue has been growing by 7.98% on average per year.

EPS 1Y (TTM)15.6%

EPS 3Y0.49%

EPS 5Y8.53%

EPS Q2Q%22.12%

Revenue 1Y (TTM)8.77%

Revenue growth 3Y4.46%

Revenue growth 5Y7.98%

Sales Q2Q%10.7%

3.2 Future

Based on estimates for the next years, MCO will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.76% on average per year.
The Revenue is expected to grow by 7.37% on average over the next years.

EPS Next Y19.02%

EPS Next 2Y15.08%

EPS Next 3Y14.09%

EPS Next 5Y12.76%

Revenue Next Year8.41%

Revenue Next 2Y8.1%

Revenue Next 3Y8.04%

Revenue Next 5Y7.37%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 37.01, the valuation of MCO can be described as expensive.
Based on the Price/Earnings ratio, MCO is valued a bit more expensive than the industry average as 77.64% of the companies are valued more cheaply.
MCO is valuated rather expensively when we compare the Price/Earnings ratio to 28.39, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 31.19, which means the current valuation is very expensive for MCO.
69.20% of the companies in the same industry are cheaper than MCO, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of MCO to the average of the S&P500 Index (25.72), we can say MCO is valued slightly more expensively.

		Industry Rank	Sector Rank
PE	37.01
Fwd PE	31.19

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MCO indicates a somewhat cheap valuation: MCO is cheaper than 67.93% of the companies listed in the same industry.
MCO's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	38.36
EV/EBITDA	25.73

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MCO does not grow enough to justify the current Price/Earnings ratio.
MCO has an outstanding profitability rating, which may justify a higher PE ratio.
MCO's earnings are expected to grow with 14.09% in the coming years. This may justify a more expensive valuation.

PEG (NY)1.95

PEG (5Y)4.34

EPS Next 2Y15.08%

EPS Next 3Y14.09%

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5. Dividend

5.1 Amount

With a yearly dividend of 0.71%, MCO is not a good candidate for dividend investing.
MCO's Dividend Yield is slightly below the industry average, which is at 5.88.
Compared to an average S&P500 Dividend Yield of 1.82, MCO's dividend is way lower than the S&P500 average.

		Industry Rank	Sector Rank
Dividend Yield	0.71%

5.2 History

The dividend of MCO is nicely growing with an annual growth rate of 11.37%!
MCO has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of MCO decreased recently.

Dividend Growth(5Y)11.37%

Div Incr Years1

Div Non Decr Years1

5.3 Sustainability

MCO pays out 30.70% of its income as dividend. This is a sustainable payout ratio.
MCO's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.

DP30.7%

EPS Next 2Y15.08%

EPS Next 3Y14.09%

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MOODY'S CORP / MCO FAQ

What is the ChartMill fundamental rating of MOODY'S CORP (MCO) stock?

ChartMill assigns a fundamental rating of 5 / 10 to MCO.

Can you provide the valuation status for MOODY'S CORP?

ChartMill assigns a valuation rating of 2 / 10 to MOODY'S CORP (MCO). This can be considered as Overvalued.

How profitable is MOODY'S CORP (MCO) stock?

MOODY'S CORP (MCO) has a profitability rating of 8 / 10.

What is the valuation of MOODY'S CORP based on its PE and PB ratios?

The Price/Earnings (PE) ratio for MOODY'S CORP (MCO) is 37.01 and the Price/Book (PB) ratio is 23.24.

Can you provide the dividend sustainability for MCO stock?

The dividend rating of MOODY'S CORP (MCO) is 4 / 10 and the dividend payout ratio is 30.7%.