MCO - Embedded Expectations Analysis - 2019 09 11
Moody's Corporation (MCO:USA) currently trades at recent highs relative to UAFRS-based (Uniform) Earnings, with a 23.6x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about their operating income, their ability to integrate acquisitions, and their operations in China.Specifically, management may lack confidence in their ability to sustain recent adjusted operating income growth, and they may be exaggerating the value of their Four Twenty-Seven acquisition. Furthermore, they may be concerned about the financial transparency they get from Chinese companies and the degree to which their acquisitions have been accretive. Finally, management may lack confidence in their ability to improve the quality of their risk assessment for Chinese firms, and they appear concerned about the sustainability of recent global issuance slowdowns.
Moody's is a provider of credit ratings and assessment services; credit, capital markets and economic research, data and analytical tools; software solutions that support financial risk management activities; quantitatively derived credit scores; learning solutions and certification services; and company information and business intelligence products. The company's segments are: Moody's Investors Service, which publishes credit ratings on a range of debt obligations and the entities that issue such obligations in markets worldwide; and Moody's Analytics, which provides financial intelligence and analytical tools to assist businesses in making decisions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.