Moody’s Earnings: Here’s Why Investors are Selling Shares Now

Moody’s Corp. (NYSE:MCO) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. However, Moody’s is now embroiled in several major legal probes related to credit ratings from the credit bubble. Shares are down 3.5%.

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Moody’s Corp. Earnings Cheat Sheet

Results: Net income increased 66.42% to $160.1 million (70 cents per diluted share) in the quarter versus a net gain of $96.2 million in the year-earlier quarter.

Revenue: Rose 32.99% to $754.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Moody’s Corp. reported adjusted net income of 70 cents per share. By that measure, the company beat the mean analyst estimate of $0.69. It beat the average revenue estimate of $683.34 million.

Quoting Management: “Moody’s delivered strong financial performance throughout 2012, with double-digit revenue growth in most lines of business,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “Despite ongoing economic uncertainty, we anticipate generally favorable market conditions to remain in place in 2013. As a result, Moody’s expects revenue growth across all areas of the business, as well as earnings per share in the range of $3.45 to $3.55.”

Key Stats (on next page)…

Revenue increased 9.54% from $688.5 million in the previous quarter. Net income decreased 12.94% from $183.9 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.8 to a profit $0.77. For the current year, the average estimate has moved up from a profit of $2.95 to a profit of $2.98 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at]