Opinions
Ashley Misquitta, CFA
Moody's Corp.
MCO-N
COMMENT
Oct 16, 2019
They were hit hard at end-2018 when markets were worried over debt. A good company, but not its valuation--he'd be cautious over this.
$217.150
Stock price when the opinion was issued
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He has SPGI right now from this industry. There will be a ton of debt issued in the near term so he likes this industry and feels it is going to benefit from the process we are going through.
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It's one of the three bond-rating agencies, which is a cozy, little club. $5 trillion of bonds are coming for renewal and all must get rated. Not a volatile business at all. High ROE, because it's capital-lite. It has room to raise the dividend or buyback shares. (Analysts’ price target is $384.29)
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With higher rates, fewer bonds are being issued, so fewer credit ratings needed. Eventually, bonds have to be issued. A cyclical issue, nothing structurally wrong. Trades at 25x earnings. Don't miss a chance to buy one of the world's great businesses at a pretty attractive multiple.
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With increase in rates, no one's issuing bonds. MCO writes credit reports, and if no one's issuing bonds, there are no reports to write. That can't last. Companies will eventually run out of cash and need to issue bonds. One of the best business models in the world. Happy to hold long term.
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