Moody’s Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Moody’s (NYSE:MCO) will unveil its latest earnings on Friday, October 26, 2012. 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.

Moody’s Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 63 cents per share, a rise of 16.7% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved up from 62 cents. Between one and three months ago, the average estimate moved up. It has dropped from 64 cents during the last month. Analysts are projecting profit to rise by 11.8% compared to last year’s $2.75.

Past Earnings Performance: The company is looking to beat analyst estimates for the third quarter in a row. Last quarter, it beat estimates with profit of 76 cents per share against the mean estimate of 71 cents. In the prior quarter, the company reported net income of 76 cents.

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Stock Price Performance: Between August 24, 2012 and October 22, 2012, the stock price had risen $6.89 (17.9%), from $38.59 to $45.48. The stock price saw one of its best stretches over the last year between August 27, 2012 and September 21, 2012, when shares rose for 19 straight days, increasing 18.9% (+$7.28) over that span. It saw one of its worst periods between April 25, 2012 and May 10, 2012 when shares fell for 12 straight days, dropping 8.6% (-$3.63) over that span.

Wall St. Revenue Expectations: On average, analysts predict $622.4 million in revenue this quarter, a rise of 17.2% from the year-ago quarter. Analysts are forecasting total revenue of $2.56 billion for the year, a rise of 12.3% from last year’s revenue of $2.28 billion.

A Look Back: In the second quarter, profit fell 8.7% to $172.5 million (76 cents a share) from $189 million (82 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 5.9% to $640.8 million from $605.2 million.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 3.5% in the third quarter of the last fiscal year, 0.5% in the fourth quarter of the last fiscal year and 12.1% in the first quarter before increasing again in the second quarter.

The company is trying to stem some negative momentum heading into this earnings announcement. Profit has dropped by a year-over-year average of 7.8% over the past four quarters.

Analyst Ratings: With three analysts rating the stock as a buy, none rating it as a sell and three rating it as a hold, there are indications of a bullish outlook.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.53 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term.

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

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