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Why Is Envestnet (ENV) Down 7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Envestnet (ENV - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Envestnet 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 catalysts.

Envestnet Surpasses Q4 Earnings and Revenue Estimates

Envestnet reported better-than-expected fourth-quarter 2020 results.

Adjusted earnings per share of 69 cents outpaced the Zacks Consensus Estimate by 6.2% and remained flat year over year. Revenues of $263.8 million surpassed the consensus mark by 2.2% and climbed 9.9% year over year.

Quarterly Numbers in Detail

Adjusted revenues of $263.9 million jumped 9% year over year. Adjusted net revenues grew 4% to $181.5 million.

Asset-based recurring revenues of $146.1 million increased 14% year over year, contributing 55% to total revenues. Subscription-based recurring revenues of $109.1 million were up 6% from the prior-year quarter’s levels, contributing 41% to total revenues. Professional services and other non-recurring revenues increased 3% year over year to $6.9 million.

Adjusted EBITDA came in at $64.9 million, up 5.6% year over year.

Envestnet ended the fourth quarter with cash and cash equivalent balance of $384.6 million compared with $362.9 million at the end of the prior quarter. The company generated around $38.2 million of cash from operating activities. CapEx was $3.3 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Envestnet has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Envestnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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