Moody’s Corporation Misses Earnings Estimates

Moody’s released its latest earnings report before opening bell this morning, posting diluted earnings of 93 cents per share, marking a 16% decline from the year-ago quarter, on $816.1 million in revenue, representing a 6% year over year decline. Analysts had been expecting earnings of $1.11 per share on $862.31 million in revenue. In last year’s first quarter, Moody’s posted $865.6 million in revenue and diluted earnings of $1.11 per share.

Moody's Corporation Misses Earnings Estimates

Moody’s hit by lower bond issuance

Moody’s said U.S. revenue declined 4% to $480 million, while non-U.S. revenue fell 8% to $336.1 million. Global Moody’s Investors Service revenue fell 13% year over year to $525.1 million with a negative 1% impact from currency translation. U.S. revenue in the segment declined 10% to $336 million. Global Moody’s Analytics revenue increased 11% year over year to $291 million, with a 2% negative impact from foreign currency exchange. U.S. revenue in the segment increased 14% to 14%. Management cited new sales of research and data and record customer retention boosted the segment’s results.

“Reduced global bond issuance in the first quarter weighed on Moody’s financial performance despite strong results at Moody’s Analytics, which is not sensitive to debt issuance activity,” Moody’s President and CEO Raymond McDaniel said in a statement. “Given market conditions, we have scaled back our revenue and earnings expectations for full year 2016, and are managing our cost base accordingly.”

Moody’s issues light guidance

Moody’s said it now expects full-year earnings of $4.55 to $4.65 per share, which includes a dilution of 2 cents per share for the acquisition of GGY, which closed last month. The outlook is far short of consensus at $4.75 per share. Management expects revenue to increase in the low-single digits.

The company bought back 2.9 million shares during the first quarter for a total of $262.1 million at an average per-share price of $89.83. It also issued 1.6 million shares under its annual employee stock-based compensation plans. Moody’s also paid $72.1 million in dividends during the first three months of the year.

As of this writing, shares of Moody’s are inactive in premarket trades.