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Why Is Moelis (MC) Down 4.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Moelis (MC - Free Report) . Shares have lost about 4.8% 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 Q1 Earnings Beat as Revenues Rise Y/Y

Moelis & Company recorded first-quarter 2021 adjusted earnings per share of $1.02, surpassing the Zacks Consensus Estimate of 97 cents. Also, the bottom line improved from the year-ago quarter’s 45 cents per share.

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 $75.8 million or $1.00 per share, significantly up from $30.1 million or 44 cents per share recorded in the prior-year quarter.

Revenues Improve, Expenses Rise

Total revenues jumped 72% year over year to $263.9 million. Further, the top line outpaced the Zacks Consensus Estimate of $238.4 million.

Total operating expenses (adjusted basis) were $191.4 million, up 48% year over year. The rise was primarily due to an increase in compensation and benefits costs.

Other income was $3.2 million against other expenses of $1.7 million recorded in the prior-year quarter.

As of Mar 31, 2021, the company had cash and liquid investments of $227.7 million, with no debt or goodwill.

Share Repurchase Update

In the reported quarter, the company repurchased 1.4 million shares for $74.2 million.

Outlook

Management expects non-compensation expenses to be close to $30 million for the second quarter 2021, excluding the transaction-related charges.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 8.55% due to these changes.

VGM Scores

At this time, Moelis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 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.


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