Moody’s Just Delivered Its Best Quarter in Years. Is Its Stock Still Undervalued?

Moody’s Corp. completed its acquisition of a 19.99% stake in Philippine Rating Services Corp. (PhilRatings) in September, expanding its Asia-Pacific presence. Moody’s sees positive outlook for Philippine corporate bond issuance due to economic growth and infrastructure needs. The investment supports Moody’s expansion in emerging markets, with plans for collaboration over the next 12-24 months.

Moody’s Corporation (MCO) acquired a minority stake in Philippine Rating Services Corporation (PhilRatings) to strengthen its presence in the Philippines' domestic debt market. PhilRatings will operate independently, and the investment aligns with MCO's strategy to expand in developing markets. MCO's shares gained 6.0% over six months, outperforming its industry. The company has a Zacks Rank #3 (Hold).

Greg Abel, successor to Warren Buffett, now oversees Berkshire Hathaway's $360 billion portfolio, with 82% concentrated in 10 stocks. Apple, American Express, and Alphabet are top holdings. Abel has added tech stocks and maintained financial stocks as key investments. Buffett's 'indefinite' holdings, like Coca-Cola, remain.

Moody's Corporation (MCO), a large-cap risk assessment firm, has seen its stock decline 8.5% from its 52-week high but is up 11.4% over the past three months, outperforming the S&P 500. However, it has underperformed the index over the past year. MCO reported better-than-expected Q2 2026 earnings with revenue of $2.2 billion and adjusted EPS of $4.68. Analysts have a 'Moderate Buy' consensus with a mean price target of $562.83, suggesting a 14.5% upside.

Stocks of Morningstar, Moody's, Goldman Sachs, Lazard, and StoneX rose 2.9%-3.3% after Fed Governor Waller signaled support for steady interest rates, citing disinflation trends. Waller noted PCE inflation dropped from 4.76% to 3.05% but warned of uncertainties. Market-implied odds for a September rate hike fell to 48.4%.

Moody's Corporation (MCO) reported Q2 FY2026 earnings with revenue up 15.1% to $2.19B and adjusted EPS up 31.5% to $4.68. The company narrowed its full-year EPS guidance and lowered operating margin guidance but raised share repurchase guidance. Analysts expect a 13.1% rise in diluted EPS for the current fiscal year. The stock has underperformed the S&P 500 and the iShares U.S. Broker-Dealers & Securities Exchanges ETF over the past year.