Moelis & Company MC is well poised for revenue growth, supported by strategic partnerships and global growth initiatives. However, elevated expenses are likely to hurt bottom-line growth.
The company’s earnings estimates for 2018 and 2019 have remained unchanged over the past 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Its price performance does not seem very impressive. Shares of the company have lost 0.5% over the past two years compared with the industry’s decline of 12.8%.
Taking a look at the fundamentals, Moelis & Company’s growth continues to be driven by strong organic performance. The company’s revenues have witnessed a four-year CAGR of 9.7% (2014-2017), mainly driven by geographical expansion efforts, continued solid M&A activities and strong restructuring activity across the world. High corporate cash balance, relatively low interest rates and restructuring activities across Europe are expected to support revenues in the upcoming quarters.
Also, Moelis & Company’s business is significantly diversified across various sectors and geographically. Its alliances in Japan and Mexico, as well as non-controlling stake equity in Moelis Australia Limited, offer support. Thus, global expansion and diversification are expected to continue aiding profitability.
However, Moelis & Company’s expense base has seen a CAGR of 3.4% over the last four years (ended 2017). The company is on a hiring spree across its global network, which has been leading to an increase in compensation costs. Hence, persistent rise in operating expenses will likely hamper bottom-line growth to some extent.
Further, Moelis & Company is a geographically diversified company with presence in almost all the major global markets. Therefore, a plethora of risks stemming from the regulatory and political environment, foreign exchange fluctuations and performance of regional economy can negatively impact the top line.
Stocks to Consider
Some better-ranked stocks in the finance space are Zions Bancorporation ZION, CPB Inc. CPF and Western Alliance Bancorporation WAL. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zions has witnessed an upward earnings estimate revision of nearly 1% for the current year, over the past 60 days. Also, the stock has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
CPB Inc. has recorded an upward earnings estimate revision of 1% for the current year, over the past 60 days. Also, it has a Value Score of B.
Western Alliance Bancorporation’s earnings estimates have remained stable for the current year, over the past 60 days. It has a Value Score of B.
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Western Alliance Bancorporation (WAL) : Free Stock Analysis Report
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