How Has MIC Performed 30 Days Post Earnings

It has been about a month since the last earnings report for Macquarie (MIC). Shares were flat in that time frame, underperforming the S&P 500.

Will the recent trend continue leading up to its next earnings release, or is Macquarie due for a pullback? 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.

Macquarie Q2 Earnings Beat Estimates, Revenues Miss

Macquarie reported mixed results in second-quarter 2020 wherein its earnings surpassed estimates, while revenues lagged the same.

On an adjusted basis, the company’s earnings were 53 cents per share, beating the Zacks Consensus Estimate of 46 cents by 15.2%. Notably, the metric declined from $1.21 per share reported in the prior-year quarter.

Macquarie generated revenues of $261 million, down 37.3% year over year.  The decline was attributable to a lackluster performance across its Atlantic Aviation and MIC Hawaii segments. Product revenues were $37 million, marking a decrease of 39.3% year over year. Service revenues declined 37% to $224 million. The top line missed the Zacks Consensus Estimate of $296 million.

Segment Details

Revenues from International-Matex Tank Terminals were $120 million, up 0.8% year over year. It represented 46% of the company’s second-quarter revenues. The segment’s EBITDA increased 6.3% year over year to $68 million.

Atlantic Aviation generated revenues of $104 million, down 56% year over year and accounted for 39.8% of the company’s overall revenues. The segment’s EBITDA declined year over year 73% to $17 million.

Revenues in MIC Hawaii were $37 million, down 39% year over year. It represented 14.2% of overall quarterly revenues. The segment’s EBITDA declined 50% year over year to $7 million.

Operating Costs

In the second quarter, Macquarie’s cost of services decreased 54% to $75 million on a year-over-year basis, whereas cost of product sales decreased 60% to $18 million.

Selling and administrative expenses were $83 million, down 1% year over year. Overall, operating expenses declined 33% year over year to about $243 million.

Liquidity & Cash Flow

As of Jun 30, 2020, the company had cash and cash equivalents of $874 million, up from $357 million on Dec 31, 2019. Long-term debt was $3,254 million, up from $2,654 million recorded at the end of 2019. In the first six months of 2020, the company generated net cash of $172 million from operating activities, down 34% year over year.

During the first six months of 2020, the company paid out dividends amounting to $87 million, representing a 49.4% decrease from the year-ago comparable period’s disbursement.

Guidance

The company stated that it remains confident in the outlook for its operating businesses over the medium term despite the uncertainties created by the coronavirus outbreak-led market downturn.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.94% due to these changes.

VGM Scores

At this time, Macquarie has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Macquarie has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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