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 the most recent earnings report in order to get a better handle on the important drivers.
Moelis & Company Q2 Earnings Beat as Revenues Improve Significantly
Moelis & Company recorded second-quarter 2021 adjusted earnings per share of $1.19, surpassing the Zacks Consensus Estimate of 82 cents. In the prior-year quarter, the company recorded a loss per share of 11 cents.
Results were driven by a substantial improvement in revenues. Moreover, the company had a solid liquidity position in the reported quarter. However, a rise in expenses was the undermining factor.
Net income (GAAP basis) was $93.2 million or $1.17 per share against a net loss of $9 million or 10 cents per share recorded in the prior-year quarter.
Revenues Improve Significantly, Expenses Rise
Total revenues jumped significantly year over year from $159.9 million to $360.9 million. The top line outpaced the Zacks Consensus Estimate of $268 million.
Total operating expenses (adjusted basis) were $242.7 million, up 37% year over year. The rise was due to an increase in both compensation and benefits costs, and non-compensation costs.
Other income was $2.8 million against other expenses of $3.3 million recorded in the prior-year quarter.
As of Jun 30, 2021, the company had cash and liquid investments of $280.7 million, with no debt or goodwill.
Share Repurchase Update
In the reported quarter, the company repurchased 0.4 million shares for $21.7 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 6.19% 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 a C. 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Moelis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.