MCO
Moody's Corporation
$510.84
Platform & Compounding FCF
70%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 59.2% above fair value
You pay
$510.84
Bear
$232.37
Fair
$320.79
Bull
$406.76
Bear
$232.37
-54.5%
6% stage 1 growth, 12% discount
Fair
$320.79
-37.2%
10% stage 1 growth, 12% discount
Bull
$406.76
-20.4%
13% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
34%
Implied Market Multiple
39.2x
Market is pricing in (growth)
20.0%
vs 9.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $539.00 from 32 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $320.79 per share.
Warnings
Wall Street's average price target is $539.00 (from 32 analysts). Our estimate is 58% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions