What happened

Moody's (MCO 0.52%) saw its stock price trend lower in February, falling 10.1% for the month, according to S&P Global Market Intelligence. The stock is currently trading at about $294 per share as of March 7, up about 5% year to date.

The major market indexes were all down in February, as the S&P 500 fell 2.6%, the Dow Jones Industrial Average dropped 4.2%, and the Nasdaq Composite was down 1.1% for the month.

So what

Moody's, the largest credit rating agency in the U.S., saw earnings and revenue decline year over year in the fourth quarter. Revenue fell about 16% from the fourth quarter of 2021 to about $1.3 billion, with most of the drop coming from Moody's Investors Service (MIS), its credit rating arm, which saw revenue drop 34% year over year. This was due to an overall slowdown in credit issuance.

The firm was buoyed by a 7% year-over-year revenue increase from Moody's Analytics (MA) to $714 million. Increases in credit research and Know Your Customer solutions for financial advisors drove Moody's Analytics revenue higher. It was the 60th straight quarter of revenue growth for Moody's Analytics.

But on the bottom line, net income was down about 42% year over year to $246 million, or $1.34 per share. However, the company beat analysts' earnings and revenue estimates.

Overall, even if investors weren't last month, analysts remained somewhat bullish on the stock, as both Baird and RBC Capital increased their price targets. Baird raised it from $289 per share to $350 per share and maintained its outperform rating, while RBC Capital boosted the target from $329 to $350, also keeping its outperform rating.

Now what

Last year was a difficult one for credit ratings, but the great thing about this company is its robust analytics business, which seems to perform in all types of markets.

The outlook is also promising, as Moody's projects low-to-mid-single-digit revenue increases in MIS and about a 10% revenue increase in MA in 2023. Overall, officials target a mid-to-high-single-digit revenue increase this year.

Further, the company is calling for diluted EPS of $8.05 to $8.55 in 2023, which would be an approximately 8% to 15% increase over the FY 2022 diluted EPS of $7.44. It projects an operating margin of about 37%. In addition, Moody's plans to buy back $250 million in stock in 2023.

Moody's is a little overpriced at present, but this is a solid growth company that dominates in its markets and is a great long-term stock.