Moody's (MCO) Q2 Results: +31% EPS Growth and +15% Revenue Increase Highlight Operating Strength
Key Takeaways
- Adjusted earnings per share (EPS) of $4.68 surged 31% year-over-year, comfortably beating the consensus estimate of approximately $4.24.
- Total revenue reached $2.19 billion, up 15% from the prior-year period and roughly $100 million above Wall Street forecasts.
- Moody's Investors Service (MIS) transaction revenue soared 34%, with rated debt issuance exceeding $2 trillion for the second consecutive quarter.
- Adjusted operating margin expanded by 440 basis points (4.4 percentage points) to 55.3%, reflecting significant operating leverage.
- Full-year 2026 adjusted EPS guidance was narrowed to $16.50–$17.00, with the midpoint raised to $16.75, though shares dipped on a largely unchanged revenue outlook.
- Share repurchase target was increased to up to $3.0 billion for the full year, signaling confidence in ongoing capital generation.
Why This Quarter Matters
Moody's Corporation sits at a key intersection of global debt markets and financial analytics. The second quarter of 2026 served as a useful check on how effectively the company can turn favorable conditions — such as strong investment-grade bond issuance, increased M&A financing, and ongoing AI-related infrastructure spending — into earnings growth. Debt markets drive MIS revenues while recurring subscriptions support Moody's Analytics (MA), so investors looked to this report to see whether both segments could deliver together. Earlier quarters had shown momentum, and Q2 helped clarify if that pace was holding or slowing.
Q2 Results in Detail
Management described the quarter as showing the full strength of Moody's earnings engine. Revenue totaled $2.19 billion, a 15% year-over-year increase that topped the Zacks Consensus Estimate of $2.09 billion. Adjusted diluted EPS reached $4.68, up 31% from $3.56 in the same quarter last year and ahead of the $4.24 consensus. On a GAAP basis, net income attributable to Moody's was $878 million, or $5.03 per share, compared with $578 million a year earlier.
Moody's Investors Service was the standout, with revenue rising 25% to $1.26 billion. Transaction revenue inside MIS jumped 34% to $891 million, helped by a 27% increase in Corporate Finance revenue to $651 million and a 38% rise in Public, Project and Infrastructure Finance to $224 million. Structured Finance grew 12% to $151 million, and Financial Institutions advanced 16% to $222 million. MIS recurring revenue rose 6% to $369 million.
Moody's Analytics reported revenue of $925 million, up 4% on a reported basis and 8% organically on a constant-currency basis. Annualized Recurring Revenue reached about $3.7 billion, up 9%, with a trailing 12-month retention rate of 95%. Data and Information led with 9% growth, while Decision Solutions and Research and Insights grew 2% and 3%, respectively.
Adjusted operating income increased 25% to $1.21 billion, lifting the adjusted operating margin by 440 basis points to 55.3%. Free cash flow climbed 47% to $688 million.
I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Market Reaction
Even with broad beats on the numbers, Moody's shares finished essentially flat to slightly lower in the session after the July 22 release. Much of the muted response traced to management notes that some activity had been pulled forward into the second quarter without changing the full-year revenue growth outlook, which stayed in the high-single-digit percent range. The full-year adjusted EPS guidance midpoint was lifted to $16.75, just below the analyst consensus of $16.78. With the stock already near $490 and up substantially over the prior year, much of the positive news appeared to be priced in ahead of the report.
Forward Outlook and Areas to Watch
Several factors stand out for the periods ahead. The narrowed adjusted EPS guidance of $16.50 to $17.00 for full-year 2026 points to roughly 12% growth at the midpoint, indicating management sees a steady operating environment even if the 34% transaction revenue pace moderates later in the year.
Debt issuance trends remain the largest variable. Investment-grade corporate issuance has been supported by large technology firms funding AI infrastructure, while high-yield markets have drawn strength from M&A financing. Any sustained change in interest-rate policy or credit spreads could shift issuance volumes quickly. The $2 trillion-plus quarterly rated issuance level, now achieved for two straight quarters, sets a high standard.
On the Analytics side, the 9% ARR growth and 95% retention rate point to a stable, expanding recurring base. Decision Solutions growth slowed to 2%, however, so product innovation and cross-selling will be watched for signs of reacceleration. Exposure to private credit, digital assets, and transition finance, areas noted on the earnings call, offers longer-term potential for additional growth.
Capital allocation continues to draw attention. Moody's lifted its full-year share repurchase target to up to $3.0 billion from roughly $2.5 billion earlier and returned $2.5 billion to shareholders in the first half through buybacks and dividends. With $6.4 billion in outstanding debt as of June 30, 2026, the balance between returns to shareholders and debt management will stay in focus.
Cost discipline also contributed to margin expansion in Q2, as total expenses rose only 5% while revenue grew 15%. Whether that operating leverage holds as the company funds growth initiatives will remain a point of scrutiny in upcoming quarters.
Enhancing Research with Tickeron Tools
In my own workflow, I turn to Tickeron’s AI Screener when I want a systematic way to compare a stock like Moody's against peers or to scan for similar patterns across sectors. The platform lets users filter by technical signals, fundamentals, and performance metrics, which can surface additional ideas without replacing core fundamental analysis. It has become a useful complement when evaluating how broader market conditions might affect individual names.
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Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
Momentum Indicator for MCO turns positive, indicating new upward trend
MCO saw its Momentum Indicator move above the 0 level on August 18, 2026. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 85 similar instances where the indicator turned positive. In of the 85 cases, the stock moved higher in the following days. The odds of a move higher are at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for MCO just turned positive on August 19, 2026. Looking at past instances where MCO's MACD turned positive, the stock continued to rise in of 46 cases over the following month. The odds of a continued upward trend are .
The 50-day moving average for MCO moved above the 200-day moving average on August 06, 2026. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where MCO advanced for three days, in of 354 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 269 cases where MCO Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for MCO moved out of overbought territory on July 17, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 40 similar instances where the indicator moved out of overbought territory. In of the 40 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where MCO declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
MCO broke above its upper Bollinger Band on August 19, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. MCO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 79, placing this stock slightly better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: MCO's P/B Ratio (28.818) is very high in comparison to the industry average of (5.815). P/E Ratio (31.937) is within average values for comparable stocks, (26.690). Projected Growth (PEG Ratio) (2.113) is also within normal values, averaging (3.218). Dividend Yield (0.008) settles around the average of (0.020) among similar stocks. P/S Ratio (10.953) is also within normal values, averaging (8.451).
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a provider of credit rating, research and risk analysis covering debt instruments services
Industry FinancialPublishingServices
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