Does Moody’s Recent Fintech Partnerships Justify Its Share Price in 2025?

• Wondering if Moody’s current share price reflects real value or just market hype? You’re not alone, and we’re about to break it down in plain terms.

• After mostly holding steady this year, Moody’s stock has ticked up 1.4% year-to-date and gained over 80% in the last five years. This suggests long-term growth but also raises questions about future upside.

• Recent headlines have focused on Moody’s expanding its risk assessment coverage and forming new partnerships in the financial technology space. These moves are driving fresh conversations about the company’s competitive position and its potential to navigate a shifting regulatory landscape.

• Right now, Moody’s valuation score sits at 0 out of 6 checks for being undervalued, according to our framework. Let’s look at how different valuation methods approach the stock, and keep in mind there is an even more useful perspective coming up at the end of this article.

Moody’s scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

The Excess Returns Model helps investors understand whether a company creates value above its cost of capital. It measures how much profit Moody’s can generate from its investments in comparison to the minimum return shareholders require, or the cost of equity.

For Moody’s, the average return on equity is an impressive 62.98%. The company’s stable earnings per share are estimated at $17.17, with a cost of equity at $2.25 per share. This results in a robust excess return of $14.93 per share. The latest book value sits at $22.18 per share, and projections point to a stable book value of $27.26 per share, based on weighted estimates from multiple analysts.

This model estimates Moody’s intrinsic share value at $327.15. Compared to the current market price, this implies the stock is about 46.6% overvalued. While Moody’s strong excess returns highlight its ability to create shareholder value, the current price appears to overshoot what the fundamentals justify.

Result: OVERVALUED

Our Excess Returns analysis suggests Moody’s may be overvalued by 46.6%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Moody’s.

For profitable companies like Moody’s, the price-to-earnings (PE) ratio is a widely accepted gauge of value. It tells investors how much they are paying for each dollar of current earnings, which is especially relevant for established businesses with reliable profits.

Market expectations of growth and risk play a huge role in what a “normal” or “fair” PE ratio should be. Companies with expected higher growth, lower risks, or strong market positions often trade at higher multiples, while those facing challenges may warrant a discount.

Moody’s current PE ratio is 38.13x, which stands well above the Capital Markets industry average of 23.63x and the peer average of 30.15x. On the surface, this suggests investors are paying a premium for Moody’s shares compared to both the broader industry and other peers. However, context is key. Factors like top-notch profit margins, growth resilience, and market stature can justify a loftier multiple.

This is where the Simply Wall St “Fair Ratio” comes in. Unlike a plain industry or peer check, the Fair Ratio (17.84x for Moody’s) models what a justified multiple should be, considering Moody’s specific earnings growth outlook, profit margins, scale, and risk profile. This holistic approach digs deeper into the unique story behind the company, not just the sector it sits in.

Comparing Moody’s current PE of 38.13x to a Fair Ratio of 17.84x, the stock trades at more than double what our model deems reasonable. This suggests it is significantly overvalued with respect to earnings potential and risk.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, an innovative approach that helps you make sense of a company’s potential by combining the story behind the business with financial forecasts and fair value estimates.

A Narrative is simply your perspective on a company, weaving together your assumptions about its future revenue, earnings, and margins into a story that makes sense to you. With Narratives on Simply Wall St’s Community page, millions of investors can turn their insights into actionable forecasts, helping you see not just where the numbers come from, but what they mean for future performance.

This tool empowers you to link Moody’s evolving business outlook directly to a calculated fair value, showing whether the stock is undervalued or overvalued compared to today’s price and making it easier to decide when to buy or sell. Best of all, Narratives update automatically as new news or earnings are announced, keeping your view aligned with real-world events.

For example, some investors expect rapid revenue growth and margin expansion for Moody’s, driving price targets as high as $595, while others are more cautious due to regulatory pressures and set targets closer to $475. Your Narrative helps you decide which view fits your beliefs and investment goals.

Do you think there’s more to the story for Moody’s? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MCO.

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