Moody’s Corporation (MCO): A Bull Case Theory

Ricardo Pillai

Tue, May 13, 2025, 7:05 AM 2 min read

We came across a bullish thesis on Moody’s Corporation (MCO) on Substack by Peter Thomason. In this article, we will summarize the bulls’ thesis on MCO. Moody’s Corporation (MCO)'s share was trading at $471.67 as of May 8^th. MCO’s trailing and forward P/E were 40.77 and 35.46 respectively according to Yahoo Finance.

A financial analyst in a suit examining investment grade debt securities on a screen.

Moody’s Corporation (MCO) is one of the three dominant players in the global credit rating oligopoly, providing essential services for debt issuance across financial markets. Its entrenched position is protected by structural industry advantages: companies require credit ratings to access capital, and investors demand these ratings from trusted sources—of which Moody’s is one. This near-monopolistic status ensures consistently high returns on capital and a durable economic moat, which Warren Buffett recognized early, maintaining a stake of over 10% in the company for more than 25 years. While Moody’s core ratings business remains a cash-generative pillar, its growing analytics segment represents a high-margin, high-growth opportunity. Leveraging deep customer trust, significant switching costs, and proprietary datasets, Moody’s analytics business is becoming increasingly vital in a data-driven world. Its cloud-based solutions are sticky and embedded across financial institutions, further solidifying its competitive position. The company’s brand strength and regulatory entrenchment make it resilient and difficult to disrupt, with expanding use cases for its services in both traditional finance and emerging technologies. As a whole, Moody’s offers a compelling long-term investment narrative, combining oligopoly economics, recurring revenue, and secular tailwinds in analytics, underpinned by exceptional capital efficiency and strategic foresight.

Moody’s Corporation (MCO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 91 hedge fund portfolios held MCO at the end of the fourth quarter which was 67 in the previous quarter. While we acknowledge the risk and potential of MCO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.