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what it is
Moody’s rates bonds, sells risk data, and rents out software that helps banks and investors decide who deserves money.
how it gets paid
Last year S made $7.7B in revenue. Moody's Investors Service was the main engine at $4.1B, or 53% of sales.
why it's growing
Revenue grew 8.9% last year. Says 2025 was likely a record year, helped by very strong demand in both ratings and analytics.
what just happened
Moody’s posted $3.64 in quarterly EPS, beating the $3.23 estimate by 12.69%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
80/100 earnings predictability — you can trust these numbers
33.4x trailing p/e — you're paying up for this one
18.2% return on capital — nothing to write home about
xvary composite: 62/100 — average
What they do
Moody’s rates bonds, sells risk data, and rents out software that helps banks and investors decide who deserves money.
When companies want to borrow, they usually need a rating. That makes Moody’s part referee, part gatekeeper. You do not casually replace a firm embedded in global debt markets, and that is how Moody’s holds a 48.0% operating margin on $7.7 billion in annual revenue.
How they make money
$7.7B
annual revenue · their business grew +8.9% last year
Moody's Investors Service
$4.1B
+8.9%
Moody's Analytics
$3.6B
+9.0%
Other
$0.0B
0.0%
The products that matter
rates debt and issuers
Moody's Investors Service
$4.2B · 53% of the company
this $4.2B business is the core franchise, and it generated 53% operating margins last quarter. when issuance is healthy, this is where the money shows up fast.
53% op margin
sells risk data and software
Moody's Analytics
$3.5B · 47% of the company
this $3.5B segment grew 12% last year and represented 47% of total revenue in the year-to-date mix. it's the part investors want to believe can smooth out the debt cycle.
+12% growth
Key numbers
48.0%
operating margin
Operating margin → how much profit the business keeps after running itself → so what: Moody’s keeps nearly $0.48 of every revenue dollar before interest and taxes.
$7.7B
annual revenue
This is the current size of the machine. It grew 8.9% vs. prior year, which tells you the business is still expanding, not just defending turf.
33.4x
trailing p/e
P/E → price divided by yearly earnings → so what: you are paying more than 33 years of current earnings for one share.
18.2%
return on capital
Return on capital → profit earned on money invested in the business → so what: Moody’s turns every $1.00 invested into about $0.18 of operating return.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 85 / 100
- long-term debt $7.0B (7% of capital)
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in MCO 3 years ago → it's now worth $16,090.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Moody’s posted $3.64 in quarterly EPS, beating the $3.23 estimate by 12.69%.
Value Line says 2025 was likely a record year, helped by very strong demand in both ratings and analytics. The September period hit the company’s highest revenue ever and a 53% operating margin.
$5.8B
revenue
$3.64
eps
53.0%
gross margin
the number that mattered
The 12.69% EPS beat mattered most because it shows estimates were too low even after a strong year, which is how expensive stocks keep justifying themselves.
-
moody's likely posted a record year for 2025.
-
the strong september period combined the company's highest revenues ever with 53% operating margins — over 500 basis points higher than a year ago — to bring year-to-date earnings up 13% above challenging 2024 comparisons.
-
revenue wise, the year-to-date strength came from the analytics division (47% of the company total), which rose 9% during the period.
-
meanwhile, the biggest driver behind the third-quarter revenue increase was the investors service division (53%), which posted 12% vs. prior year gains.
-
drivers behind this growth included a strong equity market, lower interest rates, tighter spreads, and a healthy issuance market.these factors appear to have remained in place throughout the rest of the year, suggesting a strong fourth quarter as well, even though that period has tended to be seasonally weaker.
source: company earnings report, 2026
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What could go wrong
the top threat is regulatory pressure on the credit ratings franchise. Moody's looks stable until you remember that one half of the story still depends on regulators, issuers, and debt markets continuing to play nicely together.
med
ratings franchise scrutiny
The core ratings business exists inside a regulated framework. If Moody's ever faced a serious challenge to that standing, the market would stop treating the franchise like a utility.
The exposed revenue base is the full $4.2B generated by Moody's Investors Service.
med
debt issuance slowdown
This is still a toll booth on new bonds. When rates rise, spreads widen, or credit markets freeze, issuance slows and the ratings machine feels it quickly.
A 20% drop in issuance volume could cut ratings revenue by roughly $840M.
med
analytics growth doing less work
The premium multiple leans on Moody's Analytics growing faster than Ratings. If that gap narrows, investors are left paying software-like valuation for a more cyclical bond-market business.
Analytics is a $3.5B segment that grew 12% last year. If that growth fades, the mix argument weakens fast.
MCO can absorb normal market noise. What it cannot easily absorb is a weaker issuance cycle at the same time the $3.5B analytics arm stops looking like the faster-growth offset.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
q1 2026 earnings release
Expected late April 2026. You want to hear whether issuance stayed healthy after a very strong 2025 finish.
metric
analytics growth versus ratings growth
The current split is 12% growth for Analytics versus 6% for Ratings. If that spread closes, the premium-multiple argument gets thinner.
risk
any regulatory headlines around ratings oversight
These events are rare, but they matter more here than almost anywhere else because the ratings franchise carries the brand and the margin structure.
trend
operating margin staying near the recent high
The september period hit 53% operating margin. If margins stay elevated while revenue remains steady, the compounding story is still intact.
Analyst rankings
earnings predictability
80 / 100
in human-speak, analysts view Moody's as a business that usually does what it says it will do.
price stability
85 / 100
the stock has been steadier than most. not a bunker, not a rollercoaster.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 583 buyers vs. 556 sellers in 3q2025. total institutional holdings: 0.2B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$437
$839
$517
current price
$638
target midpoint · +23% from current · 3-5yr high: $625 (+21% · 5% ann'l return)
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