7. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Investors: 91
Moody’s Corporation (NYSE:MCO) is a prominent, wide-moat company that dominates the worldwide credit ratings market and is quickly expanding its footprint in financial analytics. Over 80% of Moody’s $6.59 billion in revenue in 2023 was categorized as recurring, showing the firm’s remarkable stability during economic cycles. It is a vital participant in the capital markets because its main Moody’s Investors Service (MIS) division, which accounts for 60% of revenue, directly profits from the issuing of global debt. High hurdles to entry, pricing power, and enduring customer relationships with businesses, governments, and financial institutions all contribute to Moody’s firmly established position, which holds a 34% global credit rating market share, second only to S&P Global.
One of the main forces of diversification and long-term growth is the Moody’s Analytics (MA) division, which accounts for 40% of revenue. This segment reduces dependency on bond issuance cycles by generating high-margin, subscription-based revenue through the provision of risk modeling, regulatory solutions, and ESG-related data. Moody’s Corporation (NYSE:MCO) has carefully grown this market by taking advantage of the rising need for enterprise risk management and predictive analytics technologies.
It is still one of the most profitable financial services companies in the world, with gross margins of 72.1%, operating margins of 45.5%, and net margins of 32.4% in 2023. Consistent dividends and share buybacks are supported by $2.04 billion in free cash flow, which increases shareholder returns.
Moody’s Corporation (NYSE:MCO)’s also gains from worldwide diversification; 43% of its revenue comes from sources outside the United States, putting it in a position to take advantage of the expansion of emerging markets. The business is well-positioned for long-term revenue growth, margin expansion, and shareholder value generation due to its strong competitive positioning, pricing strength, and secular tailwinds in risk analytics and ESG products.
