Travelers headed for a Disney (NYSE:DIS) vacation in Florida will recognize the airport code MCO as shorthand for Orlando International Airport. Ticker watchers will know MCO is shorthand for Motley Fool Stock Advisor recommendation Moody's (NYSE:MCO).
Since Moody's separated from Dun & Bradstreet (NYSE:DBN) in 2000, its stock has closed higher every year. Moody's 55% operating margins are stunning. In a world swimming in debt, and with Moody's making its living measuring the impact, the company has more cash on its own balance sheet than debt. On balance, MCO has been shorthand for a wonderful investment.
When the company reported second-quarter results yesterday, it was more good news. Revenue increased 14%, and operating income was up 13%.
The company also expects the good news to continue through 2004. Income is projected to be up in the "high single digits." That is shorthand for saying the business will continue to grow, but at a slower rate. On the other hand, the company expects earnings to be in the "high single digits to low double digits." That's shorthand for continued strong earnings growth.
Since becoming publicly traded in 2000, the company has used $1.1 billion to repurchase 25.9 million of its shares -- an average share price of roughly $42.50. With a share of stock at $65 and change, share repurchases have proven to be an excellent way to build shareholder value. Wonderful, isn't it?
Those enjoying the wonder include legendary investor Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B). It owns a 16% stake.
Moody's quarterly results do not lose their luster when compared with the competition. For Fitch, a subsidiary of French giant Fimalac, revenue increased a scant 4.4%. At McGraw-Hill (NYSE:MHP), owner of Standard & Poor's, financial services revenue surged 15% and earnings soared 25%. As good as that is, and it is excellent, operating margins were 42.5% -- far short of Moody's performance.
When Tom Gardner made Moody's his very first Motley Fool Stock Advisor newsletter recommendation, he expected the company to produce solid growth year after year. That's wonderful if you can get it -- and that is exactly what Moody's has delivered.
Discuss Moody's , McGraw-Hill , or the broad spectrum of financial services stocks with other investors on the Motley Fool discussion boards .
Fool contributor W.D. Crotty owns stocks in Disney and lives close enough to Orlando to call MCO (the airport) home.
