It has been about a month since the last earnings report for Moelis (MC). Shares have lost about 14.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Moelis due for a breakout? 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 catalysts.
Moelis & Company Q1 Earnings Beat on Lower Expenses
Moelis & Company’s first-quarter 2019 adjusted earnings of 27 cents per share surpassed the Zacks Consensus Estimate of 19 cents. However, the figure compared unfavorably with the prior-year quarter’s earnings of 84 cents.
Results benefited from lower expenses. Moreover, the company’s liquidity position remained strong. However, a decline in revenues hurt results to some extent.
Net income for the reported quarter (GAAP basis) was $16.2 million or 25 cents per share, down from $54 million or 75 cents recorded in the prior-year quarter.
Revenues & Costs Decline
Total revenues declined 37.2% year over year to $137.8 million. This decrease was mainly due to a fall in the number of transactions completed during the reported quarter. However, the top line beat the Zacks Consensus Estimate of $128.5 million.
Total operating expenses (adjusted basis) were $127.3 million, down 22.1% year over year. Fall in compensation and benefits costs led to this decline.
Other income was $1.4 million, up from $0.6 million recorded in the year-ago quarter.
As of Mar 31, 2019, the company had cash and liquid investments of $78.4 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -20% due to these changes.
Currently, Moelis has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Moelis has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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