Stock analysis/share presentation ⬇️
Today we are talking about Moody's Corporation: $MCO (+0,72%)
What is and does Moody's do anyway 🤔.
Moody's is a U.S. company in the financial sector. The company analyzes and evaluates various states, companies, institutions as well as a wide variety of financial products and then issues ratings for them. Moody's thus creates trust and reliability on the financial market. In addition, the rating agency also offers its customers products and services in the field of financial analysis and risk management.
What is the breakdown of net revenue at Moody's:
Net revenue is distributed among the various activities as follows:
- Analytical and risk management services (50.6%): mainly credit advisory, research and analytical services, sales of risk management software, etc.
- Financial notation services (49.4%): for estimating companies' solvency risks.
Net sales are distributed geographically as follows: United States (52.5%), Americas (6.5%), Europe/Middle East/Africa (30.8%) and Asia/Pacific (10.2%).
When was Moody's founded?
The company was founded in 1900 by John Moody and is headquartered in New York City, New York.
How many employees does the company have: 🙋🏽♂️🙋🏻♀️
Currently, Moody's has a total of over 14,400 employees.
P/E RATIO:
Moody's has a current P/E ratio of just under 39.50 , which in my opinion is currently quite highly valued.
Market capitalization: 🏦
Currently, Moody's has a market capitalization of around 50.5 billion euros.
Dividend yield: 💰
The company pays its shareholders a nice dividend of currently over 1.0%. This payout is made on a quarterly basis. Moody's shareholders receive their dividends in March, June, September and December.
Strengths of the share: 📈
- The company pays its shareholders a 1% dividend.
- The average price target of analysts following the share has been revised upwards significantly in the last four months.
- Predictability on the company's business activity appears relatively good against the backdrop of closely matched analyst estimates.
Weaknesses of the share: 📉
- The company is currently very highly valued with a P/E ratio of almost 40 in my opinion atkuell.
- Expectations regarding sales figures for the past 12 months have largely been revised downwards. Analysts are now forecasting lower sales figures.
- Over the past 12 months, analysts have regularly revised their earnings estimates downward.
- The company's valuation level is particularly high given the cash flow generated.
Moody's business model:
Moody's is one of the world's leading providers of ratings and financial data. Moody's business model can be divided into two areas.
Moody's Investors Service: This area includes all activities that deal with assessments and ratings. In other words, it involves the preparation of ratings. The company evaluates various countries, companies, institutions and a wide range of financial products.
In the case of companies, the main focus is on evaluating creditworthiness. Based on this, Moody's can make decisions regarding the lending rate. With a good rating from Moody's, the bank will offer better interest rates. Thus, companies rely on Moody's credit rating. Moody's collects fees for issuing the ratings. Because of its excellent market position, the company has strong pricing power.
Moody's Analytics: This segment is mainly about providing financial data, analytics and credit risk management tools in the form of software. 70% of Fortune 100 companies rely on Moody's data. In total, the company has over 15,000 clients in 155 countries. Its clients include sovereigns, banks, insurance companies, real estate firms, asset managers, and more.
As one of the largest rating agencies in the world, Moody's benefits from the excellent reputation it has built up over more than 100 years. In an increasingly fast-paced and complex world, trusted credit ratings and reliable financial data are more relevant than ever. This is a service Moody's can pay well for.
A little more about the industry:
Moody's operates in the ratings market. This has existed for over 100 years. This industry is about selling trust. Money and finance are a sensitive subject. Before I invest my money, I want to know what I will get in return. Especially in the financial markets, every rational investor wants to have all the necessary information about his investment. This helps him to assess whether the investment will deliver added value in the future.
This is where the rating agencies come into play, among other things. The rating agency examines the balance sheets, the security and level of cash flows, and much more information, some of which is not public, such as customer relationships and suppliers. Then, using a formula and also individual assessment, a grade is calculated for the creditworthiness.
The better the grade, the more creditworthy the company or even a state, and the more favorable the interest rates for a bond. The best rating is AAA (for S&P and Fitch) or Aaa (for Moody's). With such ratings for a company, the probability that the company will become insolvent within a year approaches 0. With a rating of BB, the risk is already significantly higher and the investment more speculative.
The largest companies in the market are S&P Global with 43% market share and Moody's with 33% market share. They are followed by the rating agency Fitch with 17% market share. These three companies therefore account for over 90% of the total market. In recent years, the market has grown at a rate of 5.8% per year. This was mainly due to low interest rates. Interest rate hikes are expected to reduce the demand for loans. But that can make it all the more important to have a good credit rating to get the best loan terms.
In addition to the ratings business, Moody's is also active in the financial data market. This market is also about 100% trust and reliability. However, the industry is highly concentrated, with Bloomberg and Refinitiv controlling 53% of the industry and Moody's coming in at just around 6% market share.
Corporate Objective:
Moody's mission can be quickly identified on its own website. There it says "Moody's - better decisions". That's what it's all about for the company. No investor makes random decisions; everything must be properly considered and analyzed. However, this is not always easy in the financial world. For a long time, the financial market was very intransparent. The fact that this has improved over the past few years is also thanks to Moody's. Its mission is to provide trustworthy information and data that help decision-makers act with confidence.
Your opinion:🧐🤔
Now I'd love to hear your thoughts on this stock in the comments.
What do you think of Moody's and did you already know this company?
Do you guys maybe already have this stock in your portfolio?
Feel free to let me know in the comments.
Of course, this is not investment advice but just my own opinion that I would like to share with you.
