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Macquarie (MIC) Up 7.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Macquarie (MIC - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.

Will the recent positive 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 its most recent earnings report in order to get a better handle on the important drivers.

Macquarie Q3 Earnings and Revenues Miss Estimates

Macquarie Infrastructure reported disappointing third-quarter 2020 results wherein both earnings and revenues missed estimates.  

On an adjusted basis, the company’s earnings were 43 cents per share, missing the Zacks Consensus Estimate of 80 cents by 46.3%. Also, the metric declined from 98 cents per share reported in the prior-year quarter.

Macquarie generated revenues of $202 million, down 29.6% year over year.  The decline was attributable to a lackluster performance across its Atlantic Aviation and MIC Hawaii segments. Product revenues were $39 million, marking a decrease of 33% year over year. Service revenues declined 29% to $163 million. Also, the top line missed the Zacks Consensus Estimate of $326 million by 37.9%.

Segment Details

Atlantic Aviation generated revenues of $163 million, down 29% year over year and accounted for 80.7% of the company’s overall revenues. The segment’s EBITDA declined 16% to $54 million.

Revenues in MIC Hawaii were $39 million, down 33% year over year. It represented 19.3% of overall quarterly revenues. The segment’s EBITDA declined 42% to $7 million.

Operating Costs

In the third quarter, Macquarie’s cost of services decreased 48.1% to $54 million on a year-over-year basis, whereas cost of product sales decreased 41.8% to $25 million.

Selling and administrative expenses were $69 million, down 4.2% year over year. Overall, operating expenses declined 29.8% to about $181 million.

Liquidity & Cash Flow

As of Sep 30, 2020, the company had cash and cash equivalents of $429 million, up from $260 million on Dec 31, 2019. Long-term debt (net of current portion) was $1,705 million, up from $1,554 million recorded at the end of 2019. In the first nine months of 2020, the company generated net cash of $114 million from operating activities, down 48.1% year over year.

During the first nine months of 2020, the company paid out dividends amounting to $87 million, representing a 66.3% decrease from the year-ago period’s disbursement.

Guidance

The company stated that it remains confident in the outlook for its operating businesses as the end markets recovers from the effects of the coronavirus-outbreak.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Macquarie has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Macquarie has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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