Key Highlights

  • Moody's (NYSE:MCO) reported third-quarter adjusted diluted EPS of USD 4.14 on Wednesday, October 21, 2026, below the consensus estimate of USD 4.25 flagged before results but up 6% from USD 3.92.
  • Ratings transaction revenue fell 5% to USD 714 million as Corporate Finance revenue dropped 8% on rated issuance down 16%, while total revenue rose 1% to USD 2.02 billion.
  • Moody's Analytics revenue grew 3% to USD 936 million, or 8% on an organic constant-currency basis, and annualised recurring revenue rose 8% to USD 3.69 billion.
  • Full-year guidance was unchanged, including adjusted diluted EPS of USD 16.50 to USD 17.00, and the company plans up to USD 3.0 billion of share repurchases in 2026.

A Quarter Split Between Ratings and Analytics

Moody's (NYSE:MCO), which runs the Moody's Investors Service ratings agency and the Moody's Analytics data and software business, reported before the open on Wednesday, October 21, 2026. Adjusted diluted EPS was USD 4.14, below the consensus estimate of USD 4.25 flagged before results and above USD 3.92 a year earlier. Diluted EPS was USD 4.24, up 18%, lifted by a USD 115 million gain on business divestitures, mainly the sale of the Analytics regulatory solutions unit. Revenue rose 1% to USD 2.02 billion, or 3% on an organic constant-currency basis. Ratings revenue slipped 1% to USD 1.09 billion, while Analytics revenue rose 3% to USD 936 million. The adjusted operating margin was 52.6%, against 52.9% a year earlier.

How Lighter Corporate Issuance Hit Transaction Revenue

Moody's (NYSE:MCO) earns transaction revenue when it rates a new bond or loan, and recurring revenue from monitoring existing ratings. In the third quarter, transaction revenue fell 5% to USD 714 million while recurring revenue rose 8% to USD 373 million. The split mattered because Corporate Finance, the largest ratings line, saw rated issuance fall 16% and revenue drop 8% to USD 530 million. Other lines grew: Public, Project and Infrastructure Finance rose 11% to USD 179 million, Structured Finance 5% and Financial Institutions 2%. Total rated issuance fell only 2%, but the decline was concentrated in the line with the largest revenue. Analytics cushioned the quarter, with annualised recurring revenue, its subscription base, up 8% to USD 3.69 billion.

Risks and What to Watch

The first risk for Moody's (NYSE:MCO) is that corporate borrowing stays subdued, since Corporate Finance generates nearly half of ratings revenue. The second is rates: the Federal Reserve raised its target range to 3.75% to 4.00% on Wednesday, September 16, 2026, and higher borrowing costs can lead issuers to delay deals. The third is margin, with the adjusted operating margin at 52.6% against a full-year range of 52% to 53%. Chief Executive Officer Rob Fauber said the company "delivered another quarter of strong profitability and earnings growth". Investors should watch the USD 1.03 dividend, payable on Friday, December 11, 2026 to holders of record on Friday, November 20, 2026, buybacks against the USD 3.0 billion plan and fourth-quarter issuance.

Where Things Stand

The answer is that Moody's (NYSE:MCO) missed as corporate bond and loan issuance fell 16%, pulling transaction revenue down 5%. Recurring ratings fees and Analytics subscriptions kept revenue growing, and adjusted EPS still rose 6% to USD 4.14. Management held every full-year target, including adjusted EPS of USD 16.50 to USD 17.00. The next catalysts are the dividend record date of November 20, the payment on December 11 and the fourth-quarter report. Guidance is a company forecast, not a guarantee, and this is not investment advice.