Critical Survey: Moody’s (MCO) & Its Competitors

Moody’s (NYSE:MCO) is one of 155 publicly-traded companies in the “FIN – MISC SVCS” industry, but how does it contrast to its peers? We will compare Moody’s to similar businesses based on the strength of its valuation, analyst recommendations, institutional ownership, profitability, earnings, risk and dividends.

Risk and Volatility

Moody’s has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Moody’s’ peers have a beta of 5.04, suggesting that their average stock price is 404% more volatile than the S&P 500.

Insider & Institutional Ownership

92.1% of Moody’s shares are owned by institutional investors. Comparatively, 42.3% of shares of all “FIN – MISC SVCS” companies are owned by institutional investors. 0.1% of Moody’s shares are owned by company insiders. Comparatively, 20.1% of shares of all “FIN – MISC SVCS” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Moody’s and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Moody’s	$7.09 billion	$2.06 billion	43.56
Moody’s Competitors	$2.80 billion	$308.70 million	-136.13

Moody’s has higher revenue and earnings than its peers. Moody’s is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Moody’s and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moody’s	29.15%	60.37%	15.33%
Moody’s Competitors	-14.02%	2.14%	-1.36%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Moody’s and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	1	6	10	0	2.53
Moody’s Competitors	652	2740	4290	157	2.50

Moody’s currently has a consensus price target of $521.40, suggesting a potential upside of 3.37%. As a group, “FIN – MISC SVCS” companies have a potential upside of 2.59%. Given Moody’s’ stronger consensus rating and higher probable upside, equities analysts plainly believe Moody’s is more favorable than its peers.

Dividends

Moody’s pays an annual dividend of $3.76 per share and has a dividend yield of 0.7%. Moody’s pays out 32.5% of its earnings in the form of a dividend. As a group, “FIN – MISC SVCS” companies pay a dividend yield of 2.0% and pay out 46.3% of their earnings in the form of a dividend. Moody’s has increased its dividend for 16 consecutive years.

Summary

Moody’s beats its peers on 11 of the 15 factors compared.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.