On Wall Street, Thursday, shares of Moody’s Corp., a New York-based credit ratings agency, fell 6.1 percent, even though the company outperformed analysts’ earnings estimates for the fourth quarter and full year of 2009. Moody’s issued guidance for 2010 of single-digit percentage increases in both revenue and earnings.
Moody’s reported net income of $101.9 million for the quarter ended Dec. 31, 2009, down from $88.7 million in the same quarter the previous year. Diluted earnings per share for the fourth quarter were 43 cents, up from 37 cents in the fourth quarter of 2008.
The ratings agency reported revenue of $485.8 million for the fourth quarter, up from $403.7 million in the same quarter the previous year.
“We anticipate continuing recovery for 2010, but also expect market conditions to remain challenging until economic improvement across key markets is sustained,” said Chairman and CEO Raymond McDaniel in the company’s earnings release. “We are projecting a stronger revenue increase and a return to earnings growth for 2010, with ongoing expense management to support business initiatives and regulatory and compliance efforts.”
Edward J. Atorino, analyst with The Benchmark Co. LLC, said in a research note Friday, “While 2008 and 2009 were tough markets for bond issuance, we believe the worst of Moody’s fundamental decline has passed.”
Moody’s provided guidance for full-year 2010 earnings ranging from $1.75-$1.85 per diluted share. Zack’s consensus earnings estimate for 2010 is $1.86 per diluted share.
The rating agency had net income of $402 million for the fiscal year ended Dec. 31, 2009, down 12.2 percent from $457.6 million in 2008. Earnings for the full year 2009 were $1.69 per diluted share, down from $1.87 per diluted share in the previous year. Zacks’ estimate was $1.66 per diluted share.
Despite rising demand for debt grades amid thawing credit market, Moody’s forecast its expenses and revenue will both increase “in the high-single-digit percent range” this year.
The global ratings agency is facing increased regulations as its less-than-perfect ratings have help fuel the recent financial crisis. When asked when the senate is expected to move on the overall financial package, the Chairman and CEO Raymond McDaniel answered, “I would expect if anything is going to happen, it’s going to happen in the second quarter. After that, with the election year, I think it will be decreasingly likely that an action will take place in 2010.”
But amid a slew of items on the discussion table including healthcare, experts doubt that financial regulation is high on the senate’s agenda.
On Thursday, Moody’s stocks skidded $1.71 or more than 6 percent to $26.39.
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