Moody’s (MCO) Stock Faces Bullish Test As Net Profit Margin Reaches 34.3%

Moody's (MCO) just posted Q2 2026 results with revenue of US$2.2 billion and basic EPS of US$5.04, set against trailing 12 month revenue of US$8.2 billion and EPS of US$15.80 that has been growing faster than the broader US market. Over the past six quarters, revenue has shifted from US$1.90 billion in Q2 2025 to US$2.2 billion in Q2 2026, while quarterly EPS moved from US$3.22 to US$5.04, with trailing 12 month earnings up 31.1% year over year. With net profit margins in the trailing period running above last year, this earnings print puts profitability firmly in focus for investors.

See our full analysis for Moody's.

With the numbers on the table, the next step is to see how this earnings profile lines up against the most widely held narratives around Moody's and where those storylines might need updating.

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Margins Backed By 34.3% Net Profit Level

• On a trailing 12 month basis, Moody's converted US$8.2 billion of revenue into US$2.8 billion of net income, which works out to a 34.3% net profit margin compared with 29.2% a year earlier.
• Consensus narrative highlights that tight cost control and scalable platforms are helping margins, and the 34.3% margin together with trailing earnings growing 31.1% year over year gives bulls concrete support for the idea that Moody's can turn incremental revenue into profit efficiently, even as forecasts for earnings growth of about 7.7% per year are more modest than the recent trailing trend.

Revenue Near US$8.2 Billion Supports Recurring Story

• Trailing 12 month revenue reached about US$8.2 billion, up from roughly US$7.3 billion a year earlier, alongside five year earnings growth of 6.7% per year and forecast revenue growth of about 6.1% per year.
• Supporters of the bullish view point to growing private credit and data driven analytics as key engines, and the move from roughly US$7.3 billion to US$8.2 billion in trailing revenue, combined with 31.1% earnings growth over the same horizon, lines up with that idea while the softer 6.1% revenue growth outlook gives a more measured path than the recent surge.
• Consensus narrative notes rapid expansion in private credit mandates and increased use of analytics products, which fits with revenue rising by about US$0.9 billion on a trailing basis.
• At the same time, forecasts that earnings and revenue grow at single digit rates show that analysts are not extrapolating the recent 31.1% earnings jump indefinitely.

Bulls arguing that Moody's is building a durable growth engine in private credit and analytics may want to see how these themes are laid out in the full bullish case before deciding how much weight to give this quarter's numbers relative to the longer term story 🐂 Moody's Bull Case.

Valuation, P/E Of 30.6x, And Debt Risk

• Moody's trades at a P/E of 30.6x versus a peer average of 23.8x and a US Capital Markets industry average of 40.3x, with the DCF fair value cited at US$499.62 against a current share price of US$489.70.
• Critics who focus on downside risk argue that a higher P/E and high debt level leave limited room for disappointment, and the combination of a 30.6x P/E, a DCF fair value only about US$10 above the share price, and forecasts that earnings grow around 7.7% per year gives bears some numbers to point to when they question how much is already reflected in the current valuation and balance sheet profile.
• The roughly 2% gap between the DCF fair value and the market price is small relative to typical valuation swings, which can reinforce a cautious stance for readers who lean toward the bearish narrative.
• With earnings already growing faster than the broader US market over the trailing period, but future growth forecasts sitting below market averages, skeptics can argue that the current multiple demands continued execution without much margin for weaker outcomes.

Readers who lean toward the cautious side might want to see how skeptics connect Moody's valuation, growth forecasts, and debt profile into a fuller bear case before deciding how demanding this set up feels at US$489.70 🐻 Moody's Bear Case.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Moody's on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If the mix of optimism and caution around Moody's feels finely balanced, take a moment to review the key risks and rewards for yourself and see what stands out most to you with the 3 key rewards and 1 important warning sign.

See What Else Is Out There Beyond Moody's

For Moody's, the mix of a 30.6x P/E, modest earnings growth forecasts, and a small gap to DCF fair value makes the current valuation feel demanding.

If that leaves you wanting more room for upside, it is worth checking stocks screened for valuation support and quality using the 47 high quality undervalued stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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