A month has gone by since the last earnings report for Moelis (MC). Shares have lost about 9% 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 Beats on Q2 Earnings as Costs Decline
Moelis & Company’s second-quarter 2019 adjusted earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 34 cents. However, the figure compared unfavorably with the prior-year quarter’s earnings of 78 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 $37.7 million or 54 cents per share, down from $53.1 million or 72 cents recorded in the prior-year quarter.
Revenues & Costs Decline
Total revenues declined 30.3% year over year to $153.5 million. This decrease was mainly due to a fall in the number of transactions completed in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $146.8 million.
Total operating expenses (adjusted basis) were $115.7 million, down 29.2% year over year. Fall in both compensation and benefits costs, and non-compensation expenses led to this decline.
Other income was $4.3 million, up from $1.3 million recorded in the year-ago quarter.
As of Jun 30, 2019, the company had cash and liquid investments of $108.4 million.
During the quarter, it repurchased 355,039 shares for $12.6 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 -13.57% due to these changes.
At this time, Moelis has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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. It's no surprise Moelis has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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