Robust Global Loan Issuances to Support Moody's Q3 Earnings

Moody's MCO is slated to report third-quarter 2025 results on Oct. 22, before the opening bell. The company’s Corporate Finance line, the largest revenue contributor at the Moody's Investors Service (“MIS”) division, is expected to have witnessed decent revenue growth.

In the third quarter, global bond issuance activity was healthy as corporate debt spreads remained near historically tight levels for most of the quarter due to strong corporate refinancing needs. Hence, leveraged loan issuance was robust. Among the other two sub-categories within non-financial corporate bonds, investment-grade loans witnessed a modest rise in volumes on a year-over-year basis, while high-yield issuance volume was solid. The Zacks Consensus Estimate for revenues in the Corporate Finance line of $548.7 million indicates a 6.5% rise from the prior-year quarter.

The consensus estimate for revenues from the Financial Institutions business line of $174.9 million suggests a year-over-year increase of 2.9%. The Zacks Consensus Estimate for Public, Project and Infrastructure Finance business revenues of $155.2 million implies a nearly 1% growth.

Quarterly issuance volumes for collateral debt obligations were robust in the to-be-reported quarter. Meanwhile, commercial mortgage-backed securities and asset-backed securities issuance volumes witnessed marginal improvement. Hence, Structured Finance revenues are likely to have risen. The consensus estimate for the same stands at $145.7 million, suggesting a 7.9% increase.

The Zacks Consensus Estimate for the MIS division revenues for the to-be-reported quarter of $1.12 billion implies an 8.9% year-over-year rise.

Other Key Factors to Influence MCO’s Q3 Earnings

Moody's Analytics (“MA”) Division: With the demand for analytics steadily rising, revenues from all units at the MA division are expected to have increased in the third quarter. The company’s efforts to strengthen the division’s profitability through inorganic growth strategies are anticipated to have offered some support. Thus, the division’s overall revenues are likely to have risen in the to-be-reported quarter.

The consensus estimate for the MA division’s quarterly revenues is pegged at $909.52 million, indicating 9.1% growth from the prior-year quarter.

Expenses: Given Moody’s inorganic growth efforts, costs related to acquisitions and restructuring are expected to have increased in the to-be-reported quarter, thus resulting in an increase in total expenses.

Key Q3 Development for Moody’s

In August, Moody’s announced that it plans to secure a majority equity ownership in MERIS, an affiliate of Moody’s and a domestic credit rating agency in Egypt. The terms of the deal remain under wraps.

Founded in 2003, MERIS, a joint venture between Moody’s and Egyptian consultancy FinBi, has been a pioneer in Egypt’s domestic capital markets. The agency issues national-scale credit ratings across various sectors, including financial institutions, corporates and structured finance deals.

This move expands Moody’s presence in the Middle East and Africa, reinforcing its commitment to supporting the growth of local capital markets worldwide.

Earnings Whispers for Moody’s

According to our proven model, the chances of MCO beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Moody’s is +3.39%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Q3 Earnings & Sales Expectations for MCO

The Zacks Consensus Estimate for earnings is pegged at $3.65, which has been revised 1.1% upward over the past seven days. The figure indicates a 13.7% rise from the year-ago reported number. 
 

Moody's Corporation Price and EPS Surprise

Moody's Corporation price-eps-surprise | Moody's Corporation Quote

The consensus estimate for sales of $1.95 billion suggests a 7.6% rise.

Other Finance Stocks Worth a Look

Here are a couple of other finance sector stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time:

East West Bancorp EWBC is slated to announce third-quarter 2025 results on Oct. 21. The company currently has a Zacks Rank #3 and an Earnings ESP of +1.06%. 

The Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has been unchanged at $2.35 over the past week.

Raymond James Financial RJF has an Earnings ESP of +2.00% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly numbers Oct. 22. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past seven days, the Zacks Consensus Estimate for Raymond James’s quarterly earnings has been unchanged at $2.70.

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This article originally published on Zacks Investment Research (zacks.com).

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