Moody's stock has stayed nearly flat year to date, underperforming the S&P 500's 9% gain, and trades at 37 times trailing earnings ahead of its second-quarter report on July 22. The wide-moat ratings giant, which shares a near-duopoly with S&P Global, faces headwinds from potential interest rate hikes in the second half of 2026 that could curb demand for its credit rating services. For 2026, Moody's expects high-single-digit revenue growth, adjusted operating margin expansion to 52%-53%, and adjusted EPS growth of 10%-14%, while planning $2.5 billion in buybacks from free cash flow of $2.8-$3.0 billion. However, concerns over its valuation and the macro environment have kept the stock rangebound, and the author suggests waiting for the earnings report before investing.
Moodys CorporationPotential interest rate hikes in 2026 could curb demand for credit rating services
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