Earnings Preview: Moody's

Moody's (MCO) is expected to report Q3 earnings before the open on Wednesday, October 29, with a conference call scheduled at 11:30 am.

Guidance

Analysts are looking for EPS of 42c on revenue of $418.77M. The consensus range for EPS is 39c to 47c, while the consensus range for revenue is $404.4M to $436.1M, according to First Call.

Analyst Views

Moody's predicted last month that its EPS for fiscal 2008 would be $1.90 to $2.00. The company added that it was still optimistic about its long-term growth prospects, but said that it expects its revenue to drop in the mid to high teens percentage level. Also in September the company announced that it would acquire Fermat International, which provides risk and performance management software to banks, for a reported $189M.

Investors will want to know if Fermat is still slated to become accretive to Moody's earnings in 4Q09. In August, Lehman upgraded Moody's to Overweight from Underweight. The firm contended that the Street's estimate for Moody's could increase meaningfully once the fixed income credit markets stabilize. As a result of Lehman's prediction, investors will be interested to know whether Moody's believes that the fixed income credit markets have stabilized yet.

Since Moody's reported its Q2 results on July 30, the company's stock has fallen 48.3% to $18.72 from $36.15.