A month has gone by since the last earnings report for Moelis (MC). Shares have lost about 14.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Moelis & Company Q4 Earnings Miss, Expenses Rise Y/Y
Moelis & Company’s fourth-quarter 2021 adjusted earnings per share of $1.42 missed the Zacks Consensus Estimate of $1.48 per share. The bottom line reflects a decline of 28.6% from the prior-year quarter.
Results were primarily hurt by an increase in expenses. Nevertheless, marginally higher revenues provided some support. Also, the company had a solid liquidity position in the reported quarter.
Net income (GAAP basis) was $113.5 million or $1.41 per share, down from $155.6 million or $1.97 per share recorded in the prior-year quarter.
In 2021, adjusted earnings per share were $5.40, which missed the Zacks Consensus Estimate of $5.48 per share. The bottom line reflects a rise of 85.6% from the prior year. Net income (GAAP basis) was $423 million or $5.34 per share, up from $218.4 million or $2.95 per share recorded in 2020.
Revenues Improve Marginally, Expenses Rise
Total quarterly revenues increased nearly 1% year over year to $425 million. The top line missed the Zacks Consensus Estimate of $436.7 million.
In 2021, revenues were $1.54 billion, up 63% year over year. The figure lagged the Zacks Consensus Estimate of $1.57 billion.
Total quarterly operating expenses (adjusted basis) were $270.6 million, up 25.8% year over year. The rise was due to an increase in both compensation and benefits costs and non-compensation costs.
Other income (GAAP basis) was $4 million, down from $11 million recorded in the prior-year quarter.
As of Dec 31, 2021, the company had cash and liquid investments of $721.2 million, with no debt or goodwill.
Share Repurchase Update
In 2021, the company repurchased 1.9 million shares for $104.1 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -35.5% due to these changes.
At this time, Moelis has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. Notably, Moelis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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