Moelis & Company’s MC revenues are likely to be positively impacted, given its involvement in partnerships along with global growth initiatives. Moreover, the company has been witnessing upward earnings estimate revisions of late, reflecting that analysts are optimistic regarding its earnings growth potential.
The Zacks Consensus Estimate for current-year earnings has been revised 3.2% upward over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
The company’s price performance seems encouraging as well. Its shares have gained 19.2% over the past three months, outperforming 5.5% growth recorded by the industry it belongs to.
Looking at the fundamentals, Moelis & Company’s growth continues to be driven by strong organic performance. Its revenues witnessed a five-year CAGR of 14.3% (2014-2018), 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 continue supporting revenues in the upcoming quarters.
Further, Moelis & Company’s business is significantly diversified across various sectors as well as geographically. Its alliances in Japan and Mexico as well as a non-controlling equity stake in Moelis Australia Limited offer support. Thus, global expansion and diversification are expected to continue aiding profitability.
However, the company’s expenses have remained elevated over the past few years mainly due to an increase in compensation costs. In fact, expenses are likely to remain elevated in the near term as Moelis & Company continues with the hiring spree, given its efforts to expand operations into sectors and products. Thus, higher costs will likely hamper bottom-line growth to some extent.
Other Key Picks
Some other top-ranked stocks from the same space are Evercore Inc. EVR, LPL Financial Holdings Inc. LPLA and Stifel Financial Corp. SF. All three stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Evercore has witnessed an upward earnings estimate revision of nearly 5% for the current year, over the past 60 days. Its shares have gained 28.2% over the past three months.
The Zacks Consensus Estimate for earnings of LPL Financial has increased 8% over the past 60 days. Its shares have gained 13% over the past three months.
Stifel Financial’s earnings estimates for the current year have been revised upward by 6.9% over the past 60 days. Its shares have gained 22.1% over the past three months.
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