Envestnet (ENV) Up 20.9% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Envestnet (ENV). Shares have added about 20.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Envestnet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Envestnet Beats Q1 Earnings and Revenue Estimates

Envestnet posted better-than-expected results for first-quarter 2020.

Quarterly report represents an earnings surprise of 26.67% and earnings increased 46% year over year. Revenues of $246.5 million surpassed the consensus mark of $241.6 million and climbed 23% year over year.

Quarterly Numbers in Detail

Adjusted revenues of $247 million jumped 24% year over year. Adjusted net revenues grew 22% to $178.4 million.

Asset-based recurring revenues of $134.8 million increased 24% year over year, representing 55% of total revenues. Subscription-based recurring revenues of $104.6 million were up 26% from the prior-year period, representing 42% of total revenues. Professional services and other non-recurring revenues decreased 6% year over year to $7.2 million.

Adjusted EBITDA came in at $54.6 million, up 61% year over year. Adjusted EBITDA margin expanded 512 basis points (bps) year over year to 22.3%.

Envestnet ended the first quarter with cash and cash equivalent balance of $68.6 million compared with the $82.5 million witnessed at the end of the prior quarter. The company generated around $9 million of cash from operating activities and CapEx was $2.2 million.

Outlook

For second-quarter 2020, Envestnet expects adjusted EPS to be 47 cents, above the current Zacks Consensus Estimate of 43 cents. Total revenues are estimated between $225.9 million and $227.4 million, the mid-point ($226.7 million) of which is below the consensus estimate of $228.6 million.

Adjusted revenues are anticipated between $226 million and $227.5 million. Adjusted net revenues are projected at $165-$167 million. The company expects adjusted EBITDA in the band of $47.5 million to $48.5 million.

For 2020, adjusted EPS is expected between $1.92 and $ 2.02, the mid-point ($1.97) of which is much below the consensus mark of $2.04. Total revenues are anticipated between $939.5 million and $945.5 million, below the consensus estimate of $951.6 million.

The company expects adjusted revenues of $940-$946 million. Adjusted net revenues are projected at $678-$689 million. The company projects adjusted EBITDA of $200 million to $203 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 5.17% due to these changes.

VGM Scores

At this time, Envestnet has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise Envestnet has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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