MCO (Moody's Corporation): Themes, ETFs, and Basket Ideas
Last updated June 2026
Short answer
What does Moody's Corporation do?
Moody's is a global integrated risk-assessment company best known for credit ratings. It operates two main segments. Moody's Investors Service (MIS) rates the creditworthiness of bonds, loans, and other debt instruments issued by corporations, governments, and structured-finance vehicles, earning fees from issuers each time debt is rated. Moody's Analytics (MA) sells subscription software, data, research, and models for credit risk, economic forecasting, regulatory compliance, and increasingly ESG and supply-chain risk. Together with S&P Global, Moody's forms half of an effective duopoly in credit ratings, an industry protected by deep regulatory entrenchment, network effects, and the trust embedded in its ratings over more than a century. The ratings business is highly profitable and cyclical with debt-issuance volumes, while Moody's Analytics provides growing, recurring subscription revenue that smooths the cycle. Founded in 1909 and headquartered in New York, Moody's is a high-margin compounder tied to the global flow of capital and debt.
Where is Moody's Corporation heading?
1. Ratings duopoly and pricing power.
Moody's and S&P Global dominate credit ratings, an industry with high regulatory barriers and a century of accumulated trust. Issuers need ratings to access capital markets at the best cost, and the duopoly structure supports durable pricing power. As global debt outstanding grows over time, the recurring need to rate new issuance and monitor existing debt provides a long structural tailwind.
2. Moody's Analytics recurring revenue.
The Analytics segment sells subscription software, data, and risk models that generate recurring, less cyclical revenue. It expands Moody's beyond issuance-dependent ratings into credit risk management, economic forecasting, regulatory compliance, KYC, and supply-chain and ESG risk. This subscription base smooths the cyclicality of the ratings business and broadens the total addressable market.
3. Secular debt growth and new asset classes.
Global debt issuance trends higher over decades, and new areas such as private credit, infrastructure financing, and structured products create fresh demand for ratings and analytics. Moody's is positioned to monetize each new wave of debt formation and the growing complexity of risk that institutions need to measure.
4. High margins and capital-light model.
Ratings and analytics require little physical capital, so Moody's converts revenue into cash at high rates. That funds steady dividends, buybacks, and bolt-on acquisitions in data and risk, reinforcing its position as a quality compounder tied to the plumbing of global capital markets.
Risks worth tracking: The ratings segment is cyclical: debt issuance falls sharply when interest rates rise quickly or credit markets freeze, directly pressuring MIS revenue. Moody's also carries reputational and regulatory risk, a legacy of the 2008 financial crisis when rating agencies were criticized for structured-credit ratings; new regulation or liability rulings could weigh on the model. Competition from S&P Global, Fitch, and smaller rating providers, plus the rise of in-house and AI-driven risk tools, is a long-term consideration. The premium valuation embeds steady growth, so issuance downturns or multiple compression can hit the stock. Currency exposure and integration risk on acquisitions add further variability.
Earnings and valuation (approximate, early 2026)
A simple financial snapshot. These are approximations and refresh quarterly; for current figures see Moody's Corporation's investor relations page or your broker.
- Revenue (TTM): ~$7.5 billion
- Operating margin: ~45%
- Net income (TTM): ~$2.5 billion
- EPS (TTM): ~$13.50
- P/E (TTM): ~38x
- Dividend yield: ~0.7%, with a long record of annual increases
- Free cash flow: ~$2.3 billion annually
- Segment mix: Roughly split between Moody's Investors Service (ratings) and Moody's Analytics (subscriptions)
Moody's trades at a premium to the market, reflecting its position in a protected ratings duopoly, high margins, capital-light economics, and the recurring revenue of Moody's Analytics. The valuation embeds steady mid-to-high-single-digit growth and assumes durable issuance volumes over time. The multiple has historically compressed during sharp debt-issuance downturns and re-rated as markets reopened.
MCO's competitors
Credit ratings
S&P Global Ratings is the primary competitor and forms the other half of the effective duopoly. Fitch Ratings is the clear third player, with smaller agencies such as DBRS Morningstar and Kroll competing at the margins.
Risk analytics and data
Moody's Analytics competes with S&P Global Market Intelligence, MSCI, FactSet, Bloomberg, and specialized risk and compliance software vendors across credit risk, economic data, and regulatory tools.
Using MCO in a Walnut basket
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Build a basket around MCO with Walnut
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FAQ
What is Moody's ticker symbol?
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MCO, listed on the New York Stock Exchange. Officially Moody's Corporation. Founded in 1909, headquartered in New York City. Trades during US market hours and is available at every major US brokerage.
What does Moody's do?
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Moody's assesses risk. Moody's Investors Service rates the creditworthiness of bonds, loans, and structured products, charging issuers for ratings. Moody's Analytics sells subscription software, data, research, and models for credit risk, economic forecasting, compliance, and ESG and supply-chain risk. Together they make Moody's a high-margin risk-assessment company tied to global capital flows.
Who are Moody's main competitors?
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In credit ratings: S&P Global and Fitch, forming the big three. In risk analytics and data: S&P Global Market Intelligence, MSCI, FactSet, and Bloomberg. Moody's and S&P together dominate ratings as an effective duopoly with high regulatory barriers.
Is Moody's a duopoly?
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Effectively, in credit ratings. Moody's and S&P Global hold the large majority of the ratings market, protected by regulatory entrenchment, network effects, and over a century of accumulated trust. Fitch is a distant third. This structure supports durable pricing power, though it also draws regulatory scrutiny.
How does Moody's make money?
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Two ways. The ratings business charges issuers fees each time debt is rated and monitored, which is profitable but cyclical with issuance volumes. Moody's Analytics earns recurring subscription revenue from software, data, and risk models, which smooths the cycle and broadens the addressable market beyond issuance.
What is Moody's P/E ratio?
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Approximately 38x trailing twelve months as of early 2026, a premium to the broad market reflecting the protected ratings duopoly, high margins, capital-light economics, and recurring analytics revenue. The multiple has historically compressed during debt-issuance downturns.
Does Moody's pay a dividend?
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Yes, yielding roughly 0.7% as of early 2026, with a long record of annual increases. The capital-light model converts revenue into cash at high rates, funding a growing dividend, buybacks, and bolt-on acquisitions in data and risk.
Is Moody's in the S&P 500?
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Yes. MCO is a long-standing S&P 500 constituent and a notable financials holding by market cap. It is widely held across passive index funds and quality-focused strategies.
Which ETFs hold Moody's?
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MCO appears in broad market funds like VOO and VTI, financials-sector ETFs such as XLF, and many quality, moat, and dividend-growth funds. Its high margins and durable model make it a common holding in wide-moat strategies.
Is Moody's cyclical?
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The ratings half is cyclical, rising and falling with debt-issuance volumes, which slow when interest rates spike or credit markets freeze. Moody's Analytics adds recurring subscription revenue that partly offsets this, so the overall business is less cyclical than ratings alone but still tied to capital-market activity.
What sector is Moody's in?
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Financials under GICS classification, within the capital markets industry. Moody's is grouped with exchanges, data providers, and asset managers rather than banks, reflecting its fee-based, capital-light risk-assessment model.
Which thematic baskets typically include Moody's?
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On Walnut, MCO commonly appears in wide-moat and quality-compounder baskets given the ratings duopoly and high margins, and in financial-infrastructure or capital-markets baskets alongside exchanges and data providers like S&P Global and MSCI.
Is Moody's a good stock to buy?
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Descriptive, not a recommendation. Moody's offers a protected ratings duopoly, high margins, a capital-light model, and growing recurring revenue from analytics. Counterpoints include cyclicality tied to debt issuance, regulatory and reputational risk dating to the 2008 crisis, competition, and a premium valuation that leaves little room for issuance downturns. Whether it fits a portfolio depends on individual goals and risk tolerance. Walnut is informational, not investment advice.
Walnut is informational, not investment advice. Financial figures on this page are approximations; always verify current numbers with Moody's Corporation's investor relations page or your broker before making investment decisions.