Value
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.0 |
| P/S | 3.5 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.2 |
| PEG | 4.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 24.2x
- ▸PEG: 2.05
MCO · Why this verdict
Why Moody's (MCO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Moody's is a genuinely high-quality franchise — operating margins of 32%, ROE of 71%, and a Piotroski F-Score of 7 out of 9 — and has delivered four consecutive earnings beats averaging about 5% above consensus; the stock nonetheless sits in a confirmed downtrend with the moving average declining 1.9% per month, leverage at a debt-to-equity ratio of 2.4 introduces meaningful balance-sheet risk, and the risk/reward of 1.24-to-1 does not yet reach the asymmetry threshold despite 6.2% upside to the analyst consensus target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Operating margins of 32%, ROE of 71%, and a Piotroski F-Score of 7 out of 9 position this as a high-quality franchise — a foundation that typically supports resilient earnings through economic cycles, even if near-term technical headwinds are compressing the multiple. Quality breakdown | Net margins remain above 25% and gross margins stay above 60% for 4 consecutive quarters, confirming the quality of the business is durable. | →Stable |
| CounterROE of 71% is materially amplified by the debt-to-equity ratio of 2.4; a deleveraging event or a rise in the cost of debt could compress returns significantly, making the franchise appear more defensible than the capital structure currently supports. | ||
Four consecutive earnings beats averaging roughly 5% above consensus — ranging from 2.6% to 6.4% — demonstrate consistent management discipline and an approach to guidance that leaves room to exceed expectations each quarter. Earnings | Beat streak extends to 6 consecutive quarters over the next 12 months, with average positive surprise remaining above 3%. | →Stable |
| CounterThe beats are all in the 2–6% range, which is narrow enough that a single-quarter cost pressure or a modest volume deceleration could break the pattern without signaling any structural change in the business. | ||
The stock is trading below its 200-day moving average with the moving average itself declining at roughly 1.9% per month — a confirmed downtrend — which typically indicates that institutional selling pressure is in control of near-term price action. Momentum breakdown | Price reclaims the 200-day moving average and the 30-day slope of that average turns positive, sustaining for 4 consecutive weeks. | →Stable |
| CounterOn-balance volume is rising, indicating that accumulation is occurring below the surface; if buyers continue absorbing supply at current levels, the price could reverse the downtrend without further deterioration in the underlying business. | ||
A debt-to-equity ratio of 2.4 introduces a meaningful leverage penalty: if interest rates rise or cash generation softens, the balance sheet has less cushion to absorb pressure, and the same lever that amplifies ROE can work sharply in reverse. Bear case | Debt-to-equity falls below 1.5 within 8 quarters, indicating material debt reduction from operating cash flow. | →Stable |
| CounterIf free cash flow coverage of debt service remains robust and the dividend payout at 91% is sustainable on a cash basis, the leverage may be stable and manageable rather than a growing liability. | ||
Operating margins of 32%, ROE of 71%, and a Piotroski F-Score of 7 out of 9 position this as a high-quality franchise — a foundation that typically supports resilient earnings through economic cycles, even if near-term technical headwinds are compressing the multiple.
→StableQuality breakdown
- Expectation
- Net margins remain above 25% and gross margins stay above 60% for 4 consecutive quarters, confirming the quality of the business is durable.
CounterROE of 71% is materially amplified by the debt-to-equity ratio of 2.4; a deleveraging event or a rise in the cost of debt could compress returns significantly, making the franchise appear more defensible than the capital structure currently supports.
Four consecutive earnings beats averaging roughly 5% above consensus — ranging from 2.6% to 6.4% — demonstrate consistent management discipline and an approach to guidance that leaves room to exceed expectations each quarter.
→StableEarnings
- Expectation
- Beat streak extends to 6 consecutive quarters over the next 12 months, with average positive surprise remaining above 3%.
CounterThe beats are all in the 2–6% range, which is narrow enough that a single-quarter cost pressure or a modest volume deceleration could break the pattern without signaling any structural change in the business.
The stock is trading below its 200-day moving average with the moving average itself declining at roughly 1.9% per month — a confirmed downtrend — which typically indicates that institutional selling pressure is in control of near-term price action.
→StableMomentum breakdown
- Expectation
- Price reclaims the 200-day moving average and the 30-day slope of that average turns positive, sustaining for 4 consecutive weeks.
CounterOn-balance volume is rising, indicating that accumulation is occurring below the surface; if buyers continue absorbing supply at current levels, the price could reverse the downtrend without further deterioration in the underlying business.
A debt-to-equity ratio of 2.4 introduces a meaningful leverage penalty: if interest rates rise or cash generation softens, the balance sheet has less cushion to absorb pressure, and the same lever that amplifies ROE can work sharply in reverse.
→StableBear case
- Expectation
- Debt-to-equity falls below 1.5 within 8 quarters, indicating material debt reduction from operating cash flow.
CounterIf free cash flow coverage of debt service remains robust and the dividend payout at 91% is sustainable on a cash basis, the leverage may be stable and manageable rather than a growing liability.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 9.9 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 4.5 |
| FCF quality | 6.5 |
| Moat | 6.9 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 71%
- ▸Strong margins: 32%
- ▸Strong Piotroski F-Score: 7/9
- ▸High-quality business
Growth
4.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.5 |
| EPS growth | 3.6 |
Momentum
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -1.9%/30d — confirmed downtrend
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 7.5 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $2,206,474 (0.003% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.8 |
| quality rank | 7.2 |
| growth rank | 2.7 |
- ▸Superior ROE vs peers
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.6 |
| support resistance | 5.9 |
| 52w position | 6.6 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 7.2 |
| volatility | 6.2 |
| put call | 2.3 |
| implied vol | 6.9 |
| max pain risk | 3.0 |
| beta | 5.6 |
| debt equity | 2.6 |
- ▸Elevated put/call: 1.65
- ▸Above max pain $300
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.0 |
| dividend safety | 7.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 92.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.3<4.5
- ASYMMETRY:1.4<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
1.35
Upside
+6.7%
Downside
5.0%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 52 mid-range, Bollinger mid-band
EdgeTEMP_HEADWIND — High quality (8.1) with weak momentum (2.3)
SuitabilityAGGRESSIVE — Beta 1.34>1.3
Investment implication
The F-path SELL output reflects an overall score of 3.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 8.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.3<4.5, ASYMMETRY:1.4<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.35 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 8.1, Sentiment at 6.8, and Catalyst at 6.4; the weakest are Momentum at 2.3, Growth at 4.0, and Value at 4.1. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 1.35 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Operating margins of 32%, ROE of 71%, and a Piotroski F-Score of 7 out of 9 position this as a high-quality franchise — a foundation that typically supports resilient earnings through economic cycles, even if near-term technical headwinds are compressing the multiple.
Trip ifNet margin falls below 20% for 2 consecutive quarters, signaling meaningful margin compression.
- P2Four consecutive earnings beats averaging roughly 5% above consensus — ranging from 2.6% to 6.4% — demonstrate consistent management discipline and an approach to guidance that leaves room to exceed expectations each quarter.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3The stock is trading below its 200-day moving average with the moving average itself declining at roughly 1.9% per month — a confirmed downtrend — which typically indicates that institutional selling pressure is in control of near-term price action.
Trip ifThe 200-day moving-average slope rises above 0% and price holds above the 200-day moving average for 4 consecutive weeks.
- P4A debt-to-equity ratio of 2.4 introduces a meaningful leverage penalty: if interest rates rise or cash generation softens, the balance sheet has less cushion to absorb pressure, and the same lever that amplifies ROE can work sharply in reverse.
Trip ifDebt-to-equity ratio falls below 1.5 within 8 quarters.