Moody’s MCO is scheduled to announce first-quarter 2024 results on May 2, before the opening bell. The company’s Corporate Finance line, the largest revenue contributor at the Moody’s Investors Service (“MIS”) division, is likely to have witnessed solid revenue performance in the to-be-reported quarter.
Global issuance activity was robust in the first quarter of 2024, driven by historically tighter corporate spread and solid economic conditions. However, all through the quarter, yields ticked higher as the prospect of multiple interest rate cuts by the Federal Reserve became less certain.
All three sub-categories within non-financial corporate bonds (investment grade, high yield and leveraged loans) witnessed solid gains on a year-over-year basis. Similarly, financial institution issuance volume was impressive.
The Zacks Consensus Estimate for revenues from the Corporate Finance line of $454.1 million indicates a 27.6% jump from the prior-year quarter. The consensus estimate for revenues for the Financial Institutions business line of $151.7 million suggests 6.9% growth.
Further, municipal bond issuance volume witnessed a solid rise. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business of $138.9 million suggests a 7.7% increase.
Likewise, quarterly issuance volumes for residential mortgage-backed securities, collateral debt obligations and asset-backed securities were robust. Thus, Structured Finance revenues are likely to have been favorably impacted. The consensus estimate for the same stands at $121.9 million, suggesting a 23.2% growth.
The Zacks Consensus Estimate for MIS division revenues in the to-be-reported quarter of $913.9 million implies a 17.5% rise.
Other Factors to Impact Q1 Results
Moody’s Analytics (“MA”) Division: With demand for analytics rising, revenues from all units at the MA division are expected to have increased in the first quarter. The company’s efforts to strengthen the division’s profitability through inorganic growth strategies are anticipated to have offered some support. Thus, the division’s overall revenues are expected to have risen in the to-be-reported quarter.
The consensus estimate for the MA division’s quarterly revenues is pegged at $809.9 million, indicating a 9.4% increase from the prior-year quarter.
Expenses: Given Moody’s inorganic growth efforts, charges related to strategic acquisitions and restructuring costs are expected to have increased in the to-be-reported quarter. Further, inflation is likely to have led to expense growth. Hence, overall expenses might have been elevated.
Earnings Whispers
We cannot conclusively predict an earnings beat for Moody’s this time. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Moody’s is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moody’s Corporation Price and EPS Surprise
Moody’s Corporation price-eps-surprise | Moody’s Corporation Quote
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $3.06, which has been revised 8.9% north over the past 30 days. The figure indicates a 2.3% rise from the year-ago reported number.
The consensus estimate for sales of $1.73 billion suggests 17.9% year-over-year growth.
Earnings Dates & Expectations of Other Finance Stocks
LPL Financial LPLA is slated to announce first-quarter 2024 numbers on Apr 30.
Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved almost 1 % lower to $3.77, implying a 16% decrease from the prior-year reported number.
Ares Capital Corporation ARCC is scheduled to announce quarterly numbers on May 1.
Over the past week, the Zacks Consensus Estimate for Ares Capital’s quarterly earnings has remained unchanged at 59 cents, suggesting a 5.4% rise from the prior-year reported number.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar
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