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Moody's: There Are Better Options

Feb. 21, 2023 12:12 AM ETMoody's Corporation (MCO)SPGI5 Comments
Felix Fung profile picture
Felix Fung


  • Moody's is a high-quality business that operates in the attractive credit rating industry.
  • However, the company is very exposed to the macro environment and it looks less attractive than peers like S&P Global.
  • Its latest earnings results are very weak due to strong impact from macro headwinds.
  • The current valuation seems elevated with little potential upside.
  • I rate the company as a hold.

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Investment Thesis

Moody’s (NYSE:MCO) has been a premium compounder in the past decade, with shares up over 540%. However, the company is currently down 25% from its all-time in 2021 high due to macro headwinds. Despite the drop, I still do not think

This article was written by

Felix Fung profile picture
Individual investor with four-year experience. I focus on long-term investing opportunities around companies with high-quality fundamentals or compelling turnaround potential. Currently studying business and economics at the University of New South Wales. Appreciate any feedback and comments.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

@felix Fung,
do you mind sharing some of your better options? Thanks
bluescorpion0 profile picture
why does MCO have so much more capex than SPGI?
Markos Katsanos profile picture
I think the hold rating is too optimistic for MCO because you are probably going to lose a lot of money if you continue to hold MCO at current levels ($301.45).
As you correctly pointed out in your analysis the stock is overvalued and also the chart looks ominous. I see a double top formation (first top in mid-August 2022, second top in the beginning of February 2023) with a target price at $240 (>20% downside) in the near term.
I think a sell or short recommendation would be more appropriate.
Moody's is still a high quality name and their moat (in ratings) is probably better than SPGI. Right now though, you have to accept the cyclical nature if you hold MCO. I added to both names in 2022 but agree that SPGI is a better value and has the better portfolio following the merge with IHS Markit.
MoneyPig profile picture
You are not alone. SPGI is often recommended over MCO.
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