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Why Is Moelis (MC) Up 1.2% Since Last Earnings Report?

·3 min read

A month has gone by since the last earnings report for Moelis (MC). Shares have added about 1.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Moelis due for a pullback? 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 Beats on Q1 Earnings as Revenues Rise

Moelis & Company’s first-quarter 2020 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 37 cents. Moreover, the figure was 66.7% higher than the year-ago quarter’s reported number.

Results reflected an increase in revenues and a solid liquidity position. However, a rise in operating expenses acted as a headwind.

Net income (GAAP basis) was $30.1 million or 44 cents per share, up from $16.2 million or 25 cents recorded in the prior-year quarter.

Revenues Improve, Expenses Rise

Total revenues increased 11.6% year over year to $153.7 million. The rise reflected an increase in the number of transaction completions as well as an increase in average fees earned per completed transaction. However, the top line missed the Zacks Consensus Estimate of $160.7 million.

Total operating expenses (adjusted basis) were $129.2 million, up 1.5% year over year. Increase in compensation and benefits costs led to the rise.

Other expenses (GAAP basis) were $1.7 million against other income of $2.1 million recorded in the year-ago quarter.

As of Mar 31, 2020, the company had cash and liquid investments of $145.4 million, with no debt or goodwill.

Share Repurchases

During the quarter, Moelis & Company repurchased 0.9 million shares for $31.6 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 -36.67% due to these changes.

VGM Scores

Currently, Moelis has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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.

Outlook

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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