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Moody's Forward Rate of Return (Yacktman) %

: 22.15% (As of Jun. 2021)
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Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Moody's's forward rate of return for was 22.15%.

The historical rank and industry rank for Moody's's Forward Rate of Return (Yacktman) % or its related term are showing as below:

NYSE:MCO' s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: 1.62   Med: 12.99   Max: 23.76
Current: 22.04

1.62
23.76

During the past 13 years, Moody's's highest Forward Rate of Return was 23.76. The lowest was 1.62. And the median was 12.99.

NYSE:MCO's Forward Rate of Return (Yacktman) % is ranked higher than
89% of the 18 Companies
in the Capital Markets industry.

( Industry Median: 3.55 vs. NYSE:MCO: 22.04 )

Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.


Moody's Forward Rate of Return (Yacktman) % Historical Data

The historical data trend for Moody's's Forward Rate of Return (Yacktman) % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Moody's Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
Forward Rate of Return (Yacktman) %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 16.20 7.93 11.83 13.01 20.41

Moody's Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
Forward Rate of Return (Yacktman) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 16.74 18.64 20.41 22.46 22.15

Competitive Comparison

For the Financial Data & Stock Exchanges subindustry, Moody's's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Moody's Forward Rate of Return (Yacktman) % Distribution

For the Capital Markets industry and Financial Services sector, Moody's's Forward Rate of Return (Yacktman) % distribution charts can be found below:

* The bar in red indicates where Moody's's Forward Rate of Return (Yacktman) % falls into.



Moody's Forward Rate of Return (Yacktman) % Calculation

Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

Moody's's Forward Rate of Return of Jun. 2021 is

Forward Rate of Return=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=7.78590476/362.37+0.2
=22.15 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Moody's  (NYSE:MCO) Forward Rate of Return (Yacktman) % Explanation

Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.


Be Aware

In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.


Moody's Forward Rate of Return (Yacktman) % Related Terms

Thank you for viewing the detailed overview of Moody's's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.


Moody's Business Description

Moody's logo
Industry
Financial Services » Capital Markets NAICS : 523210 SIC : 7323
Address
7 World Trade Center at 250 Greenwich Street, New York, NY, USA, 10007
Moody's (along with S&P Ratings) is a leading provider of credit ratings on fixed income securities. Moody's ratings segment, known as Moody's Investors Service or MIS, includes corporates, structured finance, financial institutions, and public finance ratings. MIS represents a majority of the firm's revenue and profits. Moody's other segment is Moody's Analytics and consists of Research, Data, and Analytics or RD&A and Enterprise Risk Solutions or ERS. RD&A's products include credit research, quantitative credit scores, economic research, business intelligence, know your customer (KYC) tools, commercial real estate data and analytical tools, and training services. ERS includes risk management software solutions to financial institutions.
Executives
Bermudez Jorge A. director CORPORATE LAW DEPT., CITIGROUP INC. 425 PARK AVENUE NEW YORK NY 10043
Esperdy Therese director 7 WORLD TRADE CENTER, 250 GREENWICH ST NEW YORK NY 10007
Mckinnell Henry A director 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Seidman Leslie director 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Van Saun Bruce director CITIZENS FINANCIAL GROUP, INC. 600 WASHINGTON BLVD STAMFORD CT 06901
Forlenza Vincent A director C/O BECTON DICKERSON & CO 1 BECTON DR FRANKLIN LAKES NJ 07417
Anderson Basil director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: ANDERSON BASIL a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Mcdaniel Raymond W director, officer: President and CEO 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Goggins John J officer: EVP and General Counsel 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Kaye Mark officer: SVP & Chief Financial Officer 7 WORLD TRADE CENTER, 250 GREENWICH ST NEW YORK NY 10007
Fauber Robert officer: Chief Operating Officer 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Sullivan Caroline officer: SVP-Corporate Controller 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Hughes Melanie officer: SVP & Chief HR Officer 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Hill Kathryn director 7 WORLD TRADE CENTER 250 GREENWICH STREET NEW YORK NY 10007
Zalm Gerrit director 7 WORLD TRADE CENTER, 250 GREENWICH ST NEW YORK NY 10007

Moody's Headlines

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