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Moody's Posts Q1 Profits, Revises Outlook Due to Uncertainty

By Dave Kovaleski – Updated Apr 30, 2020 at 12:02PM

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The firm saw earnings rise 30%.

Moody's (MCO -0.23%) easily surpassed earnings estimates in the first quarter, generating double-digit percentage gains in profits, but lowered its guidance for 2020.

The credit ratings, research, and analytics firm saw revenue increase 13% to $1.3 billion compared to the first quarter of 2019. Net income was up 30.8% year over year to $488 million, while diluted earnings per share (EPS) climbed 32.6% to $2.57. EPS beat consensus estimates by about 18%.

Moody's Investor Services -- the credit rating business -- accounted for $794 million in revenue in the quarter, an increase of 18% over the first quarter of 2019. Moody's Analytics saw revenue rise 5% to $496 million. Expenses were $698 million, up from $680 million a year ago.

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Image source: Getty Images

The company approved a quarterly dividend of $0.56 per share, the same as the previous quarter.

Moody's revised its guidance for 2020 to account for several factors, including the impact of COVID-19; response to the pandemic by governments, businesses, and individuals; disruptions to the energy markets; and interest rates. The revised 2020 guidance for revenue is a decline in the mid-single-digit range, down from a previously projected increase in the mid-single-digit range. Diluted EPS was revised to be in the $7.25 to $7.85 range for the year, down from the previous range of $8.60 to 8.80. In 2019, EPS for the financial stock was $7.42.

"While we had resilient first quarter performance with impressive growth in both revenue and margins, we expect the economic implications of COVID-19 to be more pronounced through the second half of the year," President and CEO Raymond McDaniel said. "Consequently, while we believe that Moody's position and the long-term fundamentals of our business remain strong, we have both lowered and widened our full year 2020 adjusted diluted EPS guidance range to reflect this higher degree of uncertainty."

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Moody's. The Motley Fool has a disclosure policy.

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