Moody’s Corp. (MCO:US) and McGraw-Hill Cos., owners of the world’s largest ratings companies, reported profit that beat analyst estimates as demand rose for their market data and financial information.
Moody’s stock jumped 11 percent to $40.09, the biggest increase in three years, after announcing second-quarter net income of $172.5 million, or 76 cents a share, more than the 69 cents a share estimate of four analysts surveyed by Bloomberg. McGraw-Hill rose 2.6 percent to $46.14.
Moody’s revenue rose 6 percent in the quarter even as companies around the world sold fewer bonds with Europe’s debt crisis stalling issuance plans. Sales for the New York-based company’s unit that sells credit analysis, research and risk- management services, rose 19 percent to $199.6 million, it said today in a statement.
“We expect almost 10 percent revenue growth for ratings in the second half,” Douglas Arthur, an analyst with Evercore Partners Inc., said today in a report. U.S. bond issuance may climb, increasing demand for ratings, he said.
Chief Executive Officer Raymond McDaniel said in the statement he wouldn’t change annual earnings per share guidance from a range of $2.62 to $2.72 despite the volatility in bond sales.
Moody’s quarterly profit was down from $189 million, or 82 cents, a year earlier. Global corporate bond issuance fell 18 percent to $764 billion in the second quarter from $930.8 billion during the same period a year earlier, according to data compiled by Bloomberg.
Revenue for Moody’s increased to $640.8 million in the quarter from $605.2 million a year earlier, the company said. Sales for the unit that rates corporate bonds fell 4 percent to $191.5 million, while the structured-finance business took in $90.7 million, a 5 percent gain.
McGraw-Hill’s earnings excluding some items were 85 cents a share, beating the 76-cent average of analysts’ estimates compiled by Bloomberg, the company said today. Revenue at Standard & Poor’s rose 1 percent to $483 million in the second quarter. Operating profit for its commodities and commercial division, which sells news and data, rose 45 percent to $71 million.
Warren Buffett’s Berkshire Hathaway Inc. is Moody’s biggest shareholder (MCO:US) with a 13 percent stake valued at about $1.1 billion, Bloomberg data show.
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