Moody’s Solid Results Not Likely to Move Shares

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Ratings agency Moody’s Corp. (NYSE: MCO) reported fourth-quarter and full-year 2012 results before markets opened this morning.

For the fourth quarter Moody’s reported diluted earnings per share (EPS) of $0.70 on revenues of $754.2 million. In the same period a year ago, the company reported EPS of $0.43 on revenues of $567.1 million. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.69 and $683.34 million in revenues.

For the full year, the company reported adjusted EPS of $2.99 on revenues of $2.73 billion, compared with a consensus call for EPS of $2.98 on revenues of $2.66 billion.

What is most interesting about Moody’s is how the management is reacting to the recent charges against Standard & Poor’s related to ratings on mortgage bonds. S&P is owned by McGraw-Hill Cos. Inc. (NYSE: MHP). The conventional wisdom on the subject is that S&P did nothing that the other agencies did not also do, so when does the other shoe drop? Moody’s conference call takes place at 11:30 this morning, and this is certain to be a topic.

As to earnings, the company’s CEO said:

Moody’s delivered strong financial performance throughout 2012, with double-digit revenue growth in most lines of business. Despite ongoing economic uncertainty, we anticipate generally favorable market conditions to remain in place in 2013.

The company forecast 2013 EPS in the range of $3.45 to $3.55. Moody’s expects revenue growth in the high single-digit percent range. The consensus estimate for the current quarter calls for EPS of $0.77 on revenues of $690.13 million. For the full year, the consensus estimate calls for EPS of $3.18 on revenues of $2.83 billion. Neither Moody’s forecast nor the consensus estimate takes into account potential federal fraud charges though.

Moody’s shares are trading up fractionally in the premarket this morning, at $47.01 in a 52-week range of $33.86 to $55.58. The consensus target price for the shares was around $51.50 before today’s report.

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