Financial Contrast: Moody’s (MCO) vs. TransUnion (TRU)

Moody’s (NYSE: MCO) and TransUnion (NYSE:TRU) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Risk & Volatility

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Moody’s has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, TransUnion has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.



Profitability

This table compares Moody’s and TransUnion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Moody’s 23.80% -319.45% 16.19%
TransUnion 22.81% 20.73% 6.71%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Moody’s and TransUnion, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Moody’s 0 8 3 0 2.27
TransUnion 0 1 10 0 2.91

Moody’s currently has a consensus price target of $168.27, suggesting a potential upside of 1.54%. TransUnion has a consensus price target of $60.00, suggesting a potential downside of 0.91%. Given Moody’s’ higher probable upside, research analysts clearly believe Moody’s is more favorable than TransUnion.

Valuation & Earnings

This table compares Moody’s and TransUnion’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Moody’s $4.20 billion 7.53 $1.00 billion $6.07 27.30
TransUnion $1.93 billion 5.75 $441.20 million $1.71 35.41

Moody’s has higher revenue and earnings than TransUnion. Moody’s is trading at a lower price-to-earnings ratio than TransUnion, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

88.5% of Moody’s shares are held by institutional investors. 1.0% of Moody’s shares are held by insiders. Comparatively, 2.1% of TransUnion shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Moody’s pays an annual dividend of $1.76 per share and has a dividend yield of 1.1%. TransUnion does not pay a dividend. Moody’s pays out 29.0% of its earnings in the form of a dividend. Moody’s has increased its dividend for 8 consecutive years.

Summary

Moody’s beats TransUnion on 11 of the 17 factors compared between the two stocks.

Moody’s Company Profile

Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. It operates through two segments, Moody's Investors Service and Moody's Analytics. The Moody's Investors Service segment publishes credit ratings on various debt obligations and entities that issue such obligations comprising various corporate and governmental obligations, structured finance securities, and commercial paper programs. This segment provides ratings in approximately 120 countries. Its ratings are disseminated through press releases to the public through print and electronic media, including the Internet and real-time information systems for use by securities traders and investors. As of December 31, 2017, this segment had ratings relationships with approximately 4,700 non-financial corporate issuers; 4,100 financial institutions issuers; 18,000 sovereign, sub-sovereign, and supranational public finance issuers; and 1,000 infrastructure and project finance issuers, as well as rated 11,000 structured finance transactions. The Moody's Analytics segment develops products and services that support financial analysis and risk management activities of institutional participants in financial markets; and distributes research and data, such as research on debt issuers, industry studies, and commentary on topical credit related events. This segment also offers economic research, and credit data and analytical tools; software solutions and related risk management services; and offshore research and analytical services with financial training and certification programs. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York.

TransUnion Company Profile

TransUnion is a risk and information solutions provider to businesses and consumers. The Company provides consumer reports, risk scores, analytical services and decision capabilities to businesses. The Company operates through three segments: U.S. Information Services (USIS), International and Consumer Interactive. The USIS segment provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses. The International segment provides services similar to its USIS segment to businesses in select regions outside the United States. The Consumer Interactive segment offers solutions that help consumers manage their personal finances and take precautions against identity theft. Businesses uses its solutions for their process workflows to assess consumer ability to pay for services, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud.

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