It has been about a month since the last earnings report for Moody's (MCO). Shares have added about 5.6% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Moody's due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Moody's Corporation before we dive into how investors and analysts have reacted as of late.

Moody's Q2 Earnings Beat on Rising Analytics Demand & Higher Issuances

Moody's reported second-quarter 2026 adjusted earnings of $4.68 per share, which outpaced the Zacks Consensus Estimate of $4.24. The bottom line jumped 31% from the year-ago quarter.

The results primarily benefited from an improvement in revenues. Steady demand for analytics and the robust performance of the Moody’s Investors Service segment supported the results. The company’s liquidity position was strong in the quarter. An increase in operating expenses acted as a headwind.

After considering certain non-recurring items, net income attributable to Moody's was $878 million, or $5.03 per share, up from $578 million, or $3.21 per share, in the prior-year quarter.

Revenues Improve, Costs Rise

Quarterly revenues were $2.19 billion, which surpassed the Zacks Consensus Estimate of $2.09 billion. The top line rose 15% year over year. 

Total expenses were $1.14 billion, up 5% year over year.

Adjusted operating income of $1.21 billion surged 25% year over year. The adjusted operating margin was 55.3%, up from 50.9% a year ago.

Strong Quarterly Segment Performance

Moody’s Investors Service revenues jumped 25% year over year to $1.3 billion. The rise was driven by broad-based performance across all lines of business

Moody’s Analytics revenues rose 4% to $925 million. The increase was driven by 2% growth in Decision Solutions, a 3% rise in Research and Insights and a 9% jump in Data and Information.

Solid Balance Sheet

As of June 30, 2026, Moody’s had total cash, cash equivalents and short-term investments of $1.5 billion, down from $2.45 billion as of Dec. 31, 2025.

The company had $6.38 billion in outstanding long-term debt.

Share Repurchase Update

In the first half of 2026, MCO repurchased $2.2 billion worth of shares.

2026 Guidance

Moody’s expects adjusted earnings in the range of $16.50-$17.00 per share, slightly narrower than the prior target range of $16.40-$17.00 per share. 

GAAP earnings are projected to be the band of $16.00-$16.50 per share, changed from the prior target of $16.00-$16.60 per share. 

Moody’s projects revenues to increase in the high-single-digit percent range.

Operating expenses are expected to be in the mid-single-digit range. Non-operating income is projected to be between $70 million and $90 million.

Net interest expenses are anticipated to be $220-$240 million.

The adjusted operating margin is expected to be 52-53%, while the operating margin is likely to be 44%- 45%.

Moody’s expects the cash flow from operations to be $3.15-$3.35 billion. The free cash flow is projected to be in the $2.7-$2.9 billion range.

The effective tax rate is projected to be 23-25%.

2026 Segment Guidance

MIS segment revenues are expected to increase in the high-single-digit range. The adjusted operating margin is expected to be roughly 65%.

Coming to the MA segment, Moody’s anticipates revenues to rise in the mid-single-digit range, while Annualized Recurring Revenue (ARR) is expected to increase in the high-single-digit range. Further, an adjusted operating margin is expected to be 34-35%.

 

Strategic and Operational Efficiency Restructuring Program

In December 2024, Moody’s CEO approved a Strategic and Operational Efficiency Restructuring Program aimed at improving efficiency and focusing on growth areas. The initiative is expected to generate annual savings of $250–$300 million by consolidating functions, reducing staff, exiting leased office spaces and retiring legacy software. The program involves $170–$200 million in pre-tax personnel-related restructuring charges and an additional $30–$50 million in non-cash charges. It is projected to strengthen operating margins and support strategic investments, with substantial completion by the end of 2026 and related cash outlays (to be between $210-$230 million) continuing through 2027.

Moody’s expanded its Strategic and Operational Efficiency Restructuring Program in July 2026, targeting $300–$350 million in annualized savings. The program focuses on workforce reductions, office consolidation, legacy software retirement, and exits from certain businesses, including the MA Regulatory Solutions divestiture. Moody’s expects $285–$330 million in personnel-related restructuring charges, plus modest non-cash charges related to office exits and software amortization. The program is expected to be substantially completed by end-2027, with cash outlays continuing through 2028. Savings are expected to support margin expansion and strategic investments.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Moody's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Moody's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Moody's belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Synchrony (SYF), has gained 6.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Synchrony reported revenues of $4.61 billion in the last reported quarter, representing a year-over-year change of +1.9%. EPS of $2.59 for the same period compares with $2.50 a year ago.

For the current quarter, Synchrony is expected to post earnings of $2.38 per share, indicating a change of -16.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Synchrony. Also, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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