Moody's Corporation (MCO) Stock Analysis

Moody’s Corporation’s primary competitive advantage is its entrenched position in the global credit ratings market, where it operates as a near-duopoly with S&P Global. Together, these two firms control over 70% of the global credit ratings market; Moody’s alone holds an estimated 34% share, second only to S&P. This market structure creates high barriers to entry, as regulatory recognition, issuer and investor trust, and decades of performance data are difficult for new entrants to replicate.

Moody’s brand is synonymous with credibility and reliability in credit assessment, which is critical for both issuers and investors. Its ratings are embedded in financial regulations and investment mandates worldwide, making them effectively required for access to global capital markets. This regulatory entrenchment is a significant moat that shields Moody’s from both traditional and fintech competitors.

The company’s business model is capital-light and highly scalable, with operating margins consistently above 40% and return on equity exceeding 50%. Recurring revenue—primarily from annual monitoring fees and subscription-based analytics—accounts for roughly 70% of total sales, providing resilience through economic cycles.

Moody’s Analytics segment further diversifies the business, offering data, software, and risk solutions that compete with firms like MSCI and FactSet. While these rivals are formidable in analytics, none match Moody’s combination of regulatory-embedded ratings, global reach, and integrated risk solutions. The main threats are regulatory changes, reputational risk, and technological disruption, but Moody’s scale, data assets, and customer relationships provide substantial defense.