Moody’s Corp. $22 – New York symbol MCO

MOODY’S CORP. $22 (New York symbol MCO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 239.8 million; Market cap: $5.3 billion; WSSF Rating: Average) provides independent credit ratings and other information on bonds and other securities. It also provides credit assessment services to banks and other lenders. Credit ratings account for 80% of Moody’s revenues. That’s makes it vulnerable to the slowing economy, as businesses stop issuing new securities to fund acquisitions or expansion projects. In the three months ended September 30, 2008, earnings fell 17.5%, to $113.0 million from $136.9 million a year earlier. Earnings per share fell 9.8%, to $0.46 from $0.51, on fewer shares outstanding. Revenue declined 17.4%, to $433.4 million from $525.0 million. Long-term debt of $750.0 million is a manageable 1.3 times its annual cash flow. Moody’s will probably earn $1.73 a share in 2008, and the stock trades at 12.7 times that amount. Earnings in 2009 will likely fall to $1.50 a share, which gives Moody’s a still reasonable p/e of 14.7. The company continues to pay a $0.40 dividend, which now yields 1.8%. Moody’s is a buy.