Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 27 Jul 2026
MCO· Financial Services
Moody's
Moody's strong ROIC of 23.1% showcases its moat, but high valuation metrics hinder a clear buy decision.
Buffett fit
Partial fit
Owner
75
Durability
57
Management
69
Price
16
Score updated 26 Sept 2026 · analysis from 27 Jul 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Moody's outright, I'd focus on maintaining its competitive advantages while managing debt levels.
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Moody's has demonstrated profitability over the past 5 years, but the EPS max decline of 37.12% raises concerns about its resilience.
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The management has been disciplined, with a share count CAGR of -0.99% indicating , and a buyback yield of 1.4%.
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The current yield of 3.25% is below my target of 8-10%, making the valuation less attractive.
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- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 23.1% places Moody's in the top quintile of the financial services sector.
- 2 at 69.7% indicates strong and operational efficiency.
- 3Management has reduced share count by 0.99% over the last 5 years, signaling commitment to shareholder returns.
- 4Interest coverage ratio of 17.3 shows strong ability to meet debt obligations.
Concerns
5- 1 of 32.1 indicates high valuation, pricing in significant growth that may not materialize.
- 2 of 44.2% is below the sector's top-quintile threshold of 58.3%.
- 3Current ratio of 1.16 suggests potential liquidity concerns, as it is below the ideal level of 1.5.
- 4The high ratio of 2.44 raises concerns about financial leverage.
Price history
$477+18.1%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Moody's operates through two segments: Investors Service, which generates revenue from credit ratings, and Analytics, which offers subscription-based risk management tools. The company reported $7.72 billion in revenue, with a net income of $2.46 billion. The subscription model supports , making it resilient. Unit economics are strong, with a of 69.7%.
What other investors would say
The same company, judged by three other documented playbooks.
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