Moody's Corporation

Methodology

Moody's earnings can be volatile with debt issuance volumes, creating cyclicality tied to interest rates, M&A activity, and credit market conditions. The analytics business provides stability while ratings revenue swings with bond issuance. Use multi-year average earnings or focus on mid-cycle profitability rather than peak issuance years for meaningful fair value estimates.

Methodology

Moody's typically commands premium PEG ratios reflecting oligopolistic market structure, regulatory barriers to entry, and high margins from the rating business. During credit booms, low PEG ratios can be misleading if based on peak issuance conditions. Compare to S&P Global and historical ranges while adjusting for credit cycle positioning and analytics business contributions.

Methodology

Moody's offers a modest but growing dividend as management balances shareholder returns with strategic investments and acquisitions. The dividend adds some value though capital appreciation potential from analytics growth and market position matters more. PEGY better captures total return expectations for this high-quality financial information provider.