Moody's (MCO) Down 3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Moody's (MCO). Shares have lost about 3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Moody's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Moody’s Q4 Earnings Beat on Rising Analytics Demand & High Issuance Volume

Moody's reported fourth-quarter 2025 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.46. The bottom line grew 39% from the year-ago quarter.

The results primarily benefited from a rise in revenues. Steady demand for analytics and the robust performance of the MIS segment supported the results. The company’s liquidity position was strong in the quarter. A modest increase in operating expenses posed a headwind.

After considering certain non-recurring items, net income attributable to Moody's was $610 million or $3.41 per share, up from $395 million or $2.17 per share in the prior-year quarter.

For 2025, adjusted earnings per share of $14.94 grew 20% and beat the consensus estimate of $14.78. Net income attributable to Moody's (GAAP) was $2.46 billion or $13.67 per share, up from $2.06 billion or $11.26 per share in the prior-year quarter.

Revenues Improve, Costs Rise

Quarterly revenues were $1.89 billion, which surpassed the Zacks Consensus Estimate of $1.88 billion. The top line rose 13% year over year. Foreign currency translation favorably impacted revenues by 2%.

For 2025, revenues increased 9% to $7.72 billion. The top line was in line with the consensus estimate. Foreign currency translation favorably impacted revenues by 1%.

Total expenses were $1.12 billion, up almost 1% year over year.

Adjusted operating income of $920 million rose 26% year over year. The adjusted operating margin was 48.7%, up from 43.8% a year ago.

Quarterly Segment Performance Strong

Moody’s Investors Service revenues increased 17% year over year to $946 million. The rise was driven by strength in Corporate Finance, Financial Institutions, Structured Finance, and Public, Project and Infrastructure Finance revenues.

Moody’s Analytics revenues rose 9% year over year to $943 million. The increase was driven by 12% growth in Decision Solutions, a 6% rise in Research and Insights, and an 8% jump in Data & Information.

Solid Balance Sheet

As of Dec. 31, 2025, Moody’s had total cash, cash equivalents and short-term investments of $2.45 billion, down from $2.97 billion as of Dec. 31, 2024.

The company had $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under the revolving credit facility.

Share Repurchase Update

In the quarter, MCO repurchased 0.9 million shares at an average price of $485.55.

2026 Guidance

Moody’s expects adjusted earnings in the range of $16.40-$17.00 per share and GAAP earnings in the band of $15.00-$15.60 per share.

Moody’s projects revenues to increase in the high-single-digit percent range.

Operating expenses are expected to be in the mid-single-digit range. Further, non-operating expenses are projected to be between $180 million and $200 million.

Net interest expenses are estimated to be $210-$230 million.

The adjusted operating margin is expected to be 52-53%, while operating margin is likely to be 45-46%.

Moody’s expects the cash flow from operations to be $3.25-$3.45 billion. The free cash flow is projected to be in the $2.80-$3 billion range.

The effective tax rate is projected to be 23-25%.

2026 Segment Guidance

MIS segment revenues are expected to increase in the high-single-digit range. The adjusted operating margin is expected to be roughly 65%.

Coming to the MA segment, Moody’s anticipates revenues to rise in the mid-single-digit range, while Annualized Recurring Revenue (ARR) is expected to increase in the high-single-digit range. Further, an adjusted operating margin is expected to be 34-35%.

Strategic and Operational Efficiency Restructuring Program

In December 2024, Moody’s CEO approved a Strategic and Operational Efficiency Restructuring Program aimed at improving efficiency and focusing on growth areas. The initiative is expected to generate annual savings of $250–$300 million by consolidating functions, reducing staff, exiting leased office spaces and retiring legacy software. The program involves $170–$200 million in pre-tax personnel-related restructuring charges and an additional $30–$50 million in non-cash charges. It is projected to strengthen operating margins and support strategic investments, with substantial completion by the end of 2026 and related cash outlays (to be between $210-$230 million) continuing through 2027.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Moody's has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a grade of F on the value side, putting it in the lowest quintile for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Moody's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Moody's is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Coinbase Global, Inc. (COIN), a stock from the same industry, has gained 22.3%. The company reported its results for the quarter ended December 2025 more than a month ago.

Coinbase Global reported revenues of $1.78 billion in the last reported quarter, representing a year-over-year change of -21.6%. EPS of $0.66 for the same period compares with $3.39 a year ago.

For the current quarter, Coinbase Global is expected to post earnings of $0.43 per share, indicating a change of -77.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.2% over the last 30 days.

Coinbase Global has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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