Based on the aggregated intelligence of 160,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, credit-rating agency Moody's (NYSE: MCO) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Moody's business and see what CAPS investors are saying about the stock right now.

Moody's facts

Headquarters (Founded)

New York City (1900)

Market Cap

$5.1 billion


Specialized finance

Trailing-12-Month Revenue

$1.9 billion


Chairman/CEO Raymond McDaniel, Jr. (since 2005)
CFO Linda Huber (since 2005)

Return on Assets (Average, Past 3 Years)


Compound Annual Revenue and Net Income Growth (Over Past 3 Years)

(5.1%) and (18.4%)

Cash / Debt

$503.9 million / $1.1 billion

1-Year Return



Standard & Poor's [a division of McGraw-Hill (NYSE: MHP)]
Fitch Ratings
Dun and Bradstreet (NYSE: DNB)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 16% of the 1,149 members who have rated Moody's believe the stock will underperform the S&P 500 going forward. These bears include All-Star TMFDeej, who is ranked in the top 1% of our community, and TrojanFan.

Just last week, TMFDeej brought a recent regulatory filing to our community's attention:


It appears as though the ratings agencies may finally be getting theirs. Moody's recently disclosed in its 10Q (late Friday of course) that the SEC has given it a "Wells Notice," which essentially means that it is getting ready to file a formal complaint against the company. ...

You know who did know about the investigation, Moody's CEO Raymond McDaniel. Interestingly, he just happened to sell one hundred thousand shares of [Moody's] stock at $29 and good old Uncle Warren Buffett unloaded nearly a million shares of the company immediately following Moody's receipt of the Well's Notice. Coincidence? Perhaps, but still it sure looks bad.

In a reply pitch, TrojanFan also offered some bearish insight. Here's an excerpt:

It's anecdotal, but in my current position, I actually interact with the CDO groups of various rating agencies and in my own opinion Moody's is the worst of them by a fairly wide margin. S&P and Fitch are actually pretty good by comparison. Trust me when I say that the investment community would not miss these guys a bit and replacing them with some new blood by granting some new statistical rating agency licenses to some new competing firms wouldn't be a bad idea at all.

The world of Big 5 public accounting was similarly oligopolistic before [Arthur Andersen's] collapse and the industry adjusted swiftly and nicely to their disappearance and many thought that such a transitional would be immensely painful and nearly impossible, but that was proved wrong.

What do you think about Moody's, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Moody's is a Motley Fool Inside Value and a Stock Advisor selection. The Fool's disclosure policy always gets a perfect score.