Moody's beats by $0.14, beats on revs; guides FY16 EPS above consensus; notes DOJ preparing civil complaint:
- Reports Q3 (Sep) earnings of $1.34 per share, $0.14 better than the Capital IQ Consensus of $1.20; revenues rose 9.8% year/year to $917.1 mln vs the $895.14 mln Capital IQ Consensus.
- Co issues upside guidance for FY16, sees EPS of $4.62-4.72 vs. $4.61 Capital IQ Consensus Estimate (previous guidance was for $4.55-4.65). Moody's full year 2016 revenue is still expected to increase in the low-single-digit percent range. Operating expense is still expected to increase in the mid-single-digit percent range.
- "Moody's revenue increased 10% in the third quarter primarily as a result of record third quarter revenue for Moody's Investors Service, driven by higher leveraged finance issuance and US public finance activity, as well as solid growth from Moody's Analytics."
- Litigation update: Following the global credit crisis of 2008, Moody's has periodically received subpoenas and inquiries from various governmental authorities, including the US Department of Justice (:DOJ) and states attorneys general. In a letter dated September 29, 2016, the DOJ stated that it is preparing a civil complaint to be filed against Moody's and MIS in the US District Court for the District of New Jersey alleging certain violations of the Financial Institutions Reform, Recovery, and Enforcement Act in connection with the ratings MIS assigned to residential mortgage-backed securities and collateralized debt obligations in the period leading up to the 2008 financial crisis.The DOJ also stated that its investigation remains ongoing and may expand to include additional theories. A number of states attorneys general have indicated that they also expect to pursue similar claims under state law, which claims may include additional periods, theories, asset classes or activities. The Company is continuing to respond to the DOJ's and states' subpoenas and inquiries.
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