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It has been about a month since the last earnings report for Envestnet (ENV). Shares have lost about 7.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Envestnet due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Envestnet Beats on Q2 Earnings and Revenues
Envestnet second-quarter 2020 earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of 59 cents beat the Zacks Consensus Estimate by 25.5% and increased 28.3% year over year. Revenues of $235.3 million surpassed the consensus mark by 3.5% and climbed 4.8% year over year.
Quarterly Numbers in Detail
Adjusted revenues of $235.4 million jumped 3% year over year. Adjusted net revenues grew 4% to $173.5 million.
Asset-based recurring revenues of $122.2 million increased 2% year over year, representing 52% of total revenues. Subscription-based recurring revenues of $104.9 million were up 14% from the prior-year period, representing 45% of total revenues. Professional services and other non-recurring revenues decreased 33% year over year to $8.1 million.
Adjusted EBITDA came in at $55.8 million, up 29% year over year.
Envestnet ended the second quarter with cash and cash equivalent balance of $92.2 million compared with $68.6 million at the end of the prior quarter. The company generated around $56 million of cash from operating activities. CapEx was $2.2 million.
For third-quarter 2020, Envestnet expects adjusted earnings to be 59 cents per share.Total revenues are estimated between $244.5 million and $246 million.
Adjusted revenues are anticipated between $244.5 million and $246 million. Adjusted net revenues are projected in the range of$174.5-$176.5 million. The company expects adjusted EBITDA in the band of $56 million to $57 million.
For 2020, adjusted EPS is now expected in the range of $2.28-$2.31 compared with the prior-guided range of $1.92 and $2.02.
Total revenues are now anticipated between $976.3 million and $979.3 million compared with the prior-guided range of $939.5-$945.5 million.
The company now expects adjusted revenues of $977-$980 million compared with the prior guidance of $940-$946 million. Adjusted net revenues are now projected to be in the range$704.5-$708.5 million compared with the prior guidance of $678-$689 million. The company now projects adjusted EBITDA of$221-$223 million compared with the prior guidance of $200-$203 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 18.59% due to these changes.
At this time, Envestnet has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Envestnet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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