Moody’s Corp Earnings: Two-Quarter Streak of Profit Declines Snapped

S&P 500 (NYSE:SPY) component Moody’s Corporation (NYSE:MCO) reported net income above Wall Street’s expectations for the first quarter. Moody’s provides credit ratings, credit and economic related research, data and analytical tools, risk management software, quantitative credit risk measures, credit portfolio management solutions, and training services.

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Moody’s Earnings Cheat Sheet for the First Quarter

Results: Net income for Moody’s Corporation rose to $173.5 million (76 cents per share) vs. $155.5 million (67 cents per share) in the same quarter a year earlier. This marks a rise of 11.6% from the year-earlier quarter.

Revenue: Rose 12.1% to $646.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Moody’s Corporation beat the mean analyst estimate of 69 cents per share. It beat the average revenue estimate of $622.4 million.

Quoting Management: “Moody’s delivered strong financial results for the first quarter of 2012, primarily reflecting increased corporate and public, project and infrastructure debt issuance as well as continued solid performance from Moody’s Analytics,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “While the level of activity was strong in the first quarter, we remain cautious about market conditions for the remainder of the year. As a result, we are reaffirming our 2012 EPS guidance of $2.62 to $2.72 but now expect to be toward the upper end of the range.”

Key Stats:

Gross margin shrank 0.8 percentage point to 71.3%. The contraction appeared to be driven by increased costs, which rose 15.4% from the year earlier quarter while revenue rose 12.1%.

Revenue has increased for four consecutive quarters. Revenue increased 0.5% to $567.1 million in the fourth quarter of the last fiscal year. The figure rose 3.5% in the third quarter of the last fiscal year from the year earlier and climbed 26.7% in the second quarter of the last fiscal year from the year-ago quarter.

The profit increase last quarter interrupts a two-quarter year-over-year profit decreases. Net income fell 30% in the fourth quarter of the last fiscal year and in the third quarter of the last fiscal year.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 43 cents versus a mean estimate of net income of 49 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 78 cents per share to 73 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $2.71 per share, a rise from $2.64 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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