MCO Dropped 7.0% In A Week. Have You Fully Evaluated The Risk?
Moodys (MCO) stock is down 7.0% in 5 trading days. Already own the stock or planning to buy? You might want to re-consider based on the valuation as the stock still looks expensive. Consider the following data:
- Size: A $87 Bil company with $7.3 Bil in revenue currently trading at $482.32.
- Fundamentals: Last 12 month revenue growth of 11.5% and operating margin of 42.5%.
- Liquidity: Has Debt to Equity ratio of 0.08 and Cash to Assets ratio of 0.15
- Valuation: Currently trading at P/E multiple of 40.7 and P/EBIT multiple of 27.7
- Has returned (median) 56% within a year following sharp dips since 2010. See MCO Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for MCO, see Buy or Sell MCO Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and MCO drops another 20-30% to $337.62 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Moodys (MCO) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: MCO provides global risk assessment, credit ratings, and risk management products supporting institutional financial market participants.
2022 Inflation Shock
- MCO stock fell 42.2% from a high of $406.69 on 28 October 2021 to $235.25 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 May 2024
- Since then, the stock increased to a high of $527.48 on 13 February 2025 , and currently trades at $482.32
| MCO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -42.2% | -25.4% |
| Time to Full Recovery | 579 days | 464 days |
2020 Covid Pandemic
- MCO stock fell 42.1% from a high of $285.31 on 19 February 2020 to $165.09 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 July 2020
| MCO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -42.1% | -33.9% |
| Time to Full Recovery | 106 days | 148 days |
2018 Correction
- MCO stock fell 30.8% from a high of $187.02 on 25 July 2018 to $129.35 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 April 2019
| MCO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -30.8% | -19.8% |
| Time to Full Recovery | 102 days | 120 days |
2008 Global Financial Crisis
- MCO stock fell 79.1% from a high of $74.84 on 8 February 2007 to $15.63 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 November 2013
| MCO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -79.1% | -56.8% |
| Time to Full Recovery | 1821 days | 1480 days |
Worried that MCO could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.