If anyone is getting coverage in the news these days, it's the ratings agencies. Standard and Poor's stripped the U.S. of its coveted AAA debt rating, knocking the country down to AA+ and causing ripples in markets worldwide.
Stock markets plunged and politicians pointed fingers. Investors, meanwhile, looked to Moody's Investors Service (MCO), which said it was sticking with an AAA rating but would keep an eye on Washington and its gaping deficits.
Investors are keeping an eye on Moody's, which performed pretty well in the second quarter of the year. Moody's reported revenue of $605.2 million for the three months ended June 30, 2011, an increase of 27 percent from $477.8 million for the second quarter of 2010. Operating income for the quarter hit $270.1 million, a 42 percent increase from $190.5 million for the same period last year.
Business was strong on a company-wide basis. "Moody's second quarter results reflected gains in all credit ratings areas, particularly for corporate debt, and continued strong performance from Moody's Analytics," the company's research and analysis arm, Chairman and CEO Raymond McDaniel said.
"Based on second quarter performance, we are raising our full year 2011 EPS guidance to a range of $2.38 to $2.48; however, we expect more challenging debt issuance conditions in the U.S. and Europe in the second half of 2011 as compared to the first half of the year," McDaniel said. The company had set a previous EPS range of $2.22 to $2.32.
Moody's expects full-year 2011 revenue to grow in the low teens.
Companies and other entities must keep on issuing debt for Moody's to rate, although the volume of such financing is a tough call these days. Still, Moody's is optimistic that business will be good.
"Full year 2011 operating margin is still projected to be between 38 percent and 40 percent, reflecting our expectation that strong first half performance will be offset by planned expense increases and lower revenue in the second half of 2011 compared to the first half," the company says in a statement.
Moody's didn't rate itself and Standard and Poor's had assigned its rival a stable outlook back in 2010, the latest available. The company next reports on or about Oct. 28.
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