MCO
Moody's Corporation
Financial Services · Financial Data & Stock Exchanges · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- MCO receives a 67.4/100 composite score primarily because of its maximum profitability sub-score of 20.0/20, which reflects the filing data showing elite net and operating margins consistent with Moody's dominant, high-barrier ratings business.
- The near-perfect dividend sub-score of 18.8/20 reflects strong FCF payout discipline and a reliable dividend growth history as evidenced in the 10-K, which anchors the score well above the midpoint for a dividend income goal profile.
- The momentum sub-score of 14.0/20 contributes positively by confirming that quarterly financial trends within the FY2025 filing period were improving, adding incremental confidence to the overall research rating.
Why Not Higher
- The financial health sub-score of 10.0/20 materially constrains the total model score, as elevated leverage and related balance sheet metrics from the 10-K filing penalize MCO relative to companies with net-cash or lower-debt profiles.
- The zero theme score (0.0/20) removes a full potential 20 points from the composite, reflecting the model's finding that Moody's does not have measurable direct exposure to the macro growth themes tracked in scoring model v2, which is a structural ceiling on how high the overall score can reach.
Data Confidence
9 / 10
Very High — full data coverage
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Moody's Corporation is a leading global provider of credit ratings, research, and risk assessment tools, operating through two primary segments: Moody's Investors Service (MIS), which issues credit ratings on debt instruments, and Moody's Analytics (MA), which delivers data, software, and analytical solutions to financial institutions and corporations worldwide. The company's strong market position in the credit ratings duopoly gives it durable pricing power and recurring revenue streams that underpin its financial profile. From a filing-derived scoring perspective, MCO earns a composite model score of 67.4/100, reflecting genuinely strong profitability (20.0/20) and a solid dividend sub-score (18.8/20), offset by a modest financial health score (10.0/20) that reflects the elevated leverage commonly associated with Moody's capital-return strategy, and a zero theme score indicating limited direct exposure to identifiable macro growth themes tracked by the model. The growth sub-score of 12.5/20 and momentum sub-score of 14.0/20 suggest that while the business generates excellent margins, the pace of top-line and earnings expansion visible in the FY2025 10-K filing does not place it in the top tier of growth candidates. The central research tradeoff is between Moody's exceptional profitability and dividend reliability on one hand, and its leveraged balance sheet and moderate near-term growth trajectory on the other — making it most compelling as a dividend income research candidate rather than an aggressive growth candidate.
Plain English
Moody's Corporation is one of the two dominant companies in the world that rates the creditworthiness of bonds and debt, and it also sells financial data and risk analytics software to banks and companies. A model score of 67.4/100 with a Medium risk rating means the filing data shows a very profitable, dividend-paying business with a balance sheet that carries meaningful debt, so it is not a slam-dunk in every category. It is flagged as a Research Candidate most suited to dividend income goals, meaning the data supports it as a steady earner rather than a high-growth play.
Bull Case vs. Bear Case
Bull Case
- Moody's profitability sub-score of 20.0/20 — the maximum possible — reflects exceptional net margins and operating margins sourced directly from SEC EDGAR filings, confirming that the ratings and analytics business model converts revenue into earnings at an elite rate.
- The dividend sub-score of 18.8/20 indicates strong free cash flow payout discipline, a consistent dividend-per-share growth streak, and robust FCF coverage of distributions, making MCO one of the higher-ranked dividend income research candidates in this model.
- The momentum sub-score of 14.0/20 reflects sequential quarterly improvements in revenue, earnings, or margins as reported in the FY2025 10-K, suggesting the business was accelerating operationally at the time of the filing rather than decelerating.
Bear Case
- The financial health sub-score of 10.0/20 is the weakest component outside of theme, signaling that leverage ratios and balance sheet metrics sourced from the 10-K filing indicate elevated debt levels that reduce the company's margin of safety relative to peers with stronger balance sheets.
- The growth sub-score of 12.5/20 indicates that year-over-year revenue, net income, and EPS growth rates in the FY2025 filing were not strong enough to place Moody's in the upper tier of growth candidates, which limits the total addressable upside for researchers focused on earnings acceleration.
- The theme sub-score of 0.0/20 means the model identified no exposure to tracked macro growth themes, which could disadvantage MCO relative to companies in sectors with stronger structural tailwinds when evaluated on a multi-dimensional basis.
What Could Change the Picture
Bullish Triggers
- Evidence in a future 10-K filing of meaningful debt reduction or improved interest coverage ratios would lift the financial health sub-score from its current 10.0/20, directly improving the composite model score and reducing the primary identified risk.
- Accelerating year-over-year revenue and EPS growth — particularly if Moody's Analytics segment drives stronger recurring subscription revenue — would raise the growth sub-score above 12.5/20 and shift the research profile closer to balanced growth-and-income.
Bearish Triggers
- A deterioration in free cash flow coverage of dividends, as might appear in a future 10-K if debt servicing costs rise or if MIS ratings revenue contracts during a credit market slowdown, would reduce the dividend sub-score and weaken the primary argument for the current research rating.
- If operating margins were to compress materially in a subsequent annual filing — for example, due to rising compliance costs, increased competition in analytics, or regulatory changes to the ratings industry — the profitability sub-score would decline from its current maximum, significantly lowering the composite model score.
Red Flags
- The financial health sub-score of 10.0/20 warrants scrutiny, as filing-derived leverage metrics suggest that Moody's carries a debt load that, while manageable given its cash generation, leaves limited buffer if credit market activity were to contract sharply and compress MIS segment revenues.
Risk Profile
Medium RiskThe Medium risk rating for Moody's Corporation reflects the combination of a leveraged balance sheet (financial health sub-score 10.0/20) and its significant dependence on credit market issuance volumes for MIS segment revenues, which can be cyclical; while the profitability and dividend metrics are strong, these structural factors prevent a Low risk designation.
Key Catalysts to Watch
The key factors to monitor are trends in global debt issuance volumes, which directly drive Moody's Investors Service revenue as captured in future 10-K filings, and the rate of organic growth and margin expansion in the Moody's Analytics segment, which represents the company's primary lever for reducing cyclical earnings volatility.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.