MCO – Market expectations are for Uniform ROA expansion, but management may be concerned about growth, credit markets, and their long-term strategy

• Moody’s Corporation (MCO:USA) currently trades at recent highs relative to UAFRS-based (Uniform) Earnings, with a 26.6x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about their revenue growth, credit markets, and their long-term strategy
• Specifically, management may lack confidence in their ability to sustain Moody’s and Moody’s Analytics revenue growth, improve rep productivity, and manage acquisition-related costs. Furthermore, they may be concerned about the outlook for infrequent issuer debt refinancing, headwinds from negative interest rates, and the health of the Chinese green bond market. Management may also be exaggerating their focus on sustainability and the potential of REIS. Finally, they may be concerned about the effectiveness of their long-term strategy and their focus on transparency and compliance.