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Moelis & Company (MC) Q4 Earnings Miss as Revenues Plunge

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Moelis & Company’s (MC - Free Report) fourth-quarter 2022 adjusted earnings per share of 33 cents missed the Zacks Consensus Estimate of 37 cents. The bottom line reflects a plunge of 76.8% from the prior-year quarter.

Results largely benefited from a decrease in expenses. Also, the company had a solid liquidity position in the reported quarter. However, lower revenues were the headwind.

Net income (GAAP basis) was $22.7 million or 28 cents per share, down from $113.5 million or $1.41 per share.

In 2022, adjusted earnings per share were $2.22, which missed the Zacks Consensus Estimate of $2.26 per share. This reflects a decline of 58.9%. Net income (GAAP basis) was $168.7 million or $2.14 per share, down from $423 million or $5.34 per share recorded in 2021.

Revenues & Expenses Decline

Total revenues (GAAP basis) tanked 51.3% year over year to $207.2 million in the reported quarter. The fall was primarily due to decrease in average fees earned per completed transaction. The top line missed the Zacks Consensus Estimate of $214.1 million.

In 2022, revenues were $985.3 million, down 36%. However, the figure surpassed the Zacks Consensus Estimate of $982.2 million.

Total operating expenses (GAAP basis) were $177.8 million, down 34.6%. The fall was due to a decline in compensation and benefits costs.

Other income (GAAP basis) was $2.9 million in the reported quarter compared with other income of $4 million in the prior-year quarter.

As of Dec 31, 2022, the company had cash and liquid investments of $412.6 million, with no debt or goodwill.

Share Repurchase Update

In 2022, the company repurchased 3.2 million shares for $147.5 million.

In total, during 2022, the company returned $315.6 million in capital to shareholders through dividends and share repurchases.

Our View

Moelis & Company’s global expansion initiatives and diverse operations across sectors and industries bode well. However, heightened geopolitical and macroeconomic uncertainties will continue to adversely impact the company’s financials.

Moelis & Company Price, Consensus and EPS Surprise

Moelis & Company Price, Consensus and EPS Surprise

Moelis & Company price-consensus-eps-surprise-chart | Moelis & Company Quote

Currently, Moelis & Company has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Investment Banks

Raymond James’ (RJF - Free Report) first-quarter fiscal 2023 (ended Dec 31) adjusted earnings of $2.29 per share surpassed the Zacks Consensus Estimate of $2.21. The bottom line was up 6% from the prior-year quarter.

Higher interest rates and a rise in loan demand acted as tailwinds, which led to a drastic surge in net interest income (NII). Further, the performance of the Private Client Group was robust. Also, the acquisitions over the past years supported the company’s financials to some extent. Further, expenses declined during the quarter.

Yet, a poor investment banking performance amid heightened geopolitical and macroeconomic ambiguities hurt the Capital Markets segment’s results. Also, RJF recorded bank loan provision for credit losses during the quarter on worsening macroeconomic outlook.

Evercore’s (EVR - Free Report) reports fourth-quarter adjusted earnings per share of $3.50 which surpassed the Zacks Consensus Estimate of $2.65. However, the bottom line was down 51% from the prior-year quarter’s $7.15.

While the decline in the net revenues of the Investment Banking & Equities and Investment Management segments hampered the overall top line, lower expenses alleviated the bottom-line pressure. Amid a challenging operating environment, EVR saw a decline in assets under management.


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