Reviewing Moody’s (MCO) and Its Competitors

Moody’s (NYSE:MCO) is one of 1,744 public companies in the “Capital Markets” industry, but how does it compare to its competitors? We will compare Moody’s to related businesses based on the strength of its analyst recommendations, valuation, dividends, earnings, risk, profitability and institutional ownership.

Risk and Volatility

Moody’s has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Moody’s’ competitors have a beta of 0.81, meaning that their average stock price is 19% less volatile than the S&P 500.

Dividends

Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.8%. Moody’s pays out 25.1% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 30.0% of their earnings in the form of a dividend. Moody’s has raised its dividend for 16 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Moody’s and its competitors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	7	13	0	2.65
Moody’s Competitors	5550	20108	22441	641	2.37

Moody’s currently has a consensus target price of $552.63, indicating a potential upside of 9.80%. As a group, “Capital Markets” companies have a potential upside of 25.14%. Given Moody’s’ competitors higher probable upside, analysts clearly believe Moody’s has less favorable growth aspects than its competitors.

Earnings & Valuation

This table compares Moody’s and its competitors revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Moody’s	$7.72 billion	$2.46 billion	30.67
Moody’s Competitors	$2.39 billion	$398.52 million	16.69

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Moody’s	35.26%	84.76%	19.65%
Moody’s Competitors	321.05%	79.19%	3.72%

Institutional and Insider Ownership

92.1% of Moody’s shares are owned by institutional investors. Comparatively, 30.5% of shares of all “Capital Markets” companies are owned by institutional investors. 0.1% of Moody’s shares are owned by company insiders. Comparatively, 12.9% of shares of all “Capital Markets” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Moody’s beats its competitors on 10 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.