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What to Expect From Moelis & Company (MC) in Q1 Earnings?

Moelis & Company MC is slated to announce first-quarter 2019 results on Apr 30, after market close. Its earnings and revenues are expected to decline year over year.

Strong investment banking performance supported the company’s fourth-quarter 2018 results, which surpassed the Zacks Consensus Estimate. This was partly offset by higher expenses.

It has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters.

Moelis & Company Price and EPS Surprise


Moelis & Company Price and EPS Surprise | Moelis & Company Quote

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings of 19 cents has moved 72.9% lower over the past 30 days. Earnings estimates suggest a plunge of 70.8% from the year-ago reported figure. Also, the consensus estimate for sales of $128.5 million indicates 41.4% decline.

Factors to Impact Q1 Results

Underwriting fees growth to be muted: Prolonged government shutdown at the beginning of the quarter and fears of economic slowdown weighed on companies’ plans to raise capital by issuing shares. Thus, growth inMoelis & Company’s equity underwriting fees is expected to be weak.

Also, rise in interest rates is likely to have lowered companies’ involvement in debt issuance activities. Nonetheless, the Fed’s dovish stance on future rate hikes must have led to a slight increase in debt issuances during the quarter. Thus, debt underwriting fees are not expected to increase much.

Advisory fees to show some strength: While dealmakers across the globe were active during the quarter, global deal value and volume witnessed a fall due to higher borrowing costs and several geopolitical concerns. Likewise, given the government shutdown and geopolitical ambiguity, IPO activities slowed down despite decent equity market performance during the quarter.

Hence, these factors will have an adverse impact on Moelis & Company’s advisory fees. Nonetheless, the strong M&A deal pipeline from the previous quarters will offer some support.

Expenses to rise: Moelis & Company consistently hires advisors and invests in franchises and thus, overall expenses are expected to increase. Further, regulatory changes and a highly competitive environment might lead to higher costs.

Here is what our quantitative model predicts:

We cannot conclusively predict an earnings beat for Moelis & Company this time. That’s because it does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Moelis & Company is 0.00%.

Zacks Rank: Moelis & Company currently has a Zacks Rank #3, which increases the predictive power of the ESP. But we need to have a positive Earnings ESP to be sure of the earnings beat.

Stocks to Consider

Here are a few finance stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Axos Financial, Inc. AX is slated to release results on Apr 30. It has an Earnings ESP of +0.26% and currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Solar Capital Ltd. SLRC has an Earnings ESP of +4.07% and carries a Zacks Rank of 2 (Buy) at present. The company is slated to release results on May 6.

GrupoFinanciero Galicia S.A. GGAL is expected to release results on May 29. It presently has an Earnings ESP of +4.76% and a Zacks Rank #3.

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