Another quarter is now on the books, and once again, Motley Fool Stock Advisor recommendation Moody's
Moody's Investor Service reported revenues of $359.2 million, with ratings revenues and research revenues rising 17% and 24%, respectively. Revenues in Moody's core ratings segment, which represents about three-fourths of the firm's total, were driven by double-digit increases across all four divisions, with the largest -- Global Structured Finance -- posting a 19% increase to $138.5 million. As in the last quarter, domestic residential mortgage-backed securities led the way, but this key business line is expected to slow over the year as interest rates climb higher.
Within the Corporate Finance sector, revenues were up 10%, driven entirely by growth overseas. Strength in the European and Asian high-yield markets helped international revenues jump 30%. That gain more than offset flat results in the United States, where investment-grade bonds were little changed and high-yield issuance fell substantially. Elsewhere, demand for quality research remains robust, as revenues generated from the company's research services rose 24%, and those from Moody's KMV -- a subsidiary that provides credit-processing software and other tools to help lenders and institutional investors evaluate credit risk -- ticked up 13%.
Though Moody's remains cautiously optimistic about the year ahead, there is still much to like about the company. The Securities and Exchange Commission itself has helped dig the firm's wide moat, as stringent entrance requirements have deterred many would-be competitors. Together, Moody's and McGraw-Hill's
Nevertheless, with widespread slowdowns in debt issuance (particularly stateside) expected to contain Moody's earnings growth to the single digits this year, it's hard to give the company's stock an "AAA" rating at these levels.
Moody's has the distinct honor of being the first Motley Fool Stock Advisor recommendation from Tom Gardner. Get on board today with a risk-free six-month subscription.
Fool contributor Nathan Slaughter owns none of the companies mentioned.