Moody's earnings partially lifted by commercial real estate transactions
Moody's Investors Service (MCO) reported Thursday revenue of $564.3 million, in 4Q 2010 an increase from $485.8 million in the third quarter. Diluted earnings per share of $0.58 for the fourth quarter of 2010 increased 35% from $0.43 in the fourth quarter of 2009. "We anticipate market conditions to remain generally favorable in 2011," said Raymond McDaniel, Moody's CEO. "With this outlook, we are projecting revenue increases across most areas of our business and earnings per share in the range of $2.12 to $2.22." The credit ratings agency said losses from a dip in asset-backed securities trading was offset from a lift in commercial real estate transactions. Moody's said in the report, that it expects the structured finance sector, which encompasses securitization, to remain largely flat for the rest of 2011. Moody's revenue for the full-year 2010 totaled $2.032 billion, an increase of 13% from $1.797 billion for 2009. In the United States, the rating agency reported revenue of $1.089 billion for 2010, up 18%. The firm expects revenue to increase through 2011, with an operating margin is projected between 38% and 40%, as macroeconomic conditions improve. Uncertainties in the United States secondary markets, especially interest rate volatility and eventual withdrawal of government-sponsored economic stabilization initiatives may potentially impact this goal. "There is an important degree of uncertainty surrounding these assumptions and, if actual conditions differ from these assumptions, Moody's results for the year may differ materially from the current outlook," according to the earnings. At year-end, Moody's had $1.2 billion of outstanding debt and $1 billion of additional debt capacity available under its revolving credit facility. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney. The author holds no relevant investments.