Moelis & Company (MC - Free Report) is well poised for growth on the back of consistent top-line rise, global diversification, solid earnings performance and a strong balance sheet position. Thus, this Zacks Rank #2 (Buy) stock seems like an attractive investment opportunity right now.
Further, the analysts are bullish on the stock as it has been witnessing solid upward estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for earnings has been raised 3.2% for 2019, while estimates have remained stable for 2020.
Also, the stock has rallied 15.5% over the past three months.
Let’s check what makes Moelis & Company a viable investment option.
Earnings strength: Moelis & Company has witnessed earnings growth of 15.8% in the past three-five years, higher than the industry’s growth of 13.8%. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth rate of 5.8% for 2019 and 10.3% for 2020.
Further, the stock has a Growth Score of A. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Also, the company has a decent earnings surprise history, the average beat for the trailing four quarters being 10.8%.
Revenue growth: Moelis & Company’s top-line growth reflects favorable operating backdrop. The company’s revenues have witnessed a five-year (2014-2018) CAGR of 14.3%.
High corporate cash balance, relatively low interest rates and restructuring activities across Europe are expected to support revenues in the upcoming quarters. Further, the company’s projected sales growth rate of 9.3% and 10.5% for 2019 and 2020, respectively, reflects continuation of upward momentum.
Strong Leverage: Moelis & Company’s debt/equity ratio is 0.00 compared with the industry average of 0.32. This shows that the company does not use debt to finance its operations. Hence, it will be financially stable even in adverse economic conditions.
Impressive capital deployment actions: Since 2014, Moelis & Company has announced six regular dividend hikes, with the last one announced in February 2019. Apart from this, it pays special dividends on a regular basis. The last special dividend was declared earlier this month (this being the seventh special dividend announcement since its IPO). Further, the company has authorized the repurchase of up to $100 million worth of shares of Class A common stock of Moelis & Company and/or Class A partnership units of Moelis & Company Group LP, with no expiration date. With no debt and a strong balance sheet position, these capital deployment actions look sustainable.
Superior Return on Equity (ROE): Moelis & Company has a ROE of 59.32%, significantly higher than the industry average of 12.72%. This shows that the company reinvests its cash more efficiently.
Favorable VGM Score: Moelis & Company has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Other Stocks Worth a Look
Other stocks in the same space worth a look are Stifel Financial Corp. (SF - Free Report) , Evercore Inc (EVR - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) .
Stifel Financial has witnessed an upward earnings estimate revision of 6.9% for the current year, over the past 30 days. Its share price has increased 12.9% in the past three months. The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evercore’s Zacks Consensus Estimate for the current year has moved 5% upward over the past 30 days. Its shares have gained 13.9% in the past three months. It carries a Zacks Rank #2.
LPL Financial also carries a Zacks Rank of 2. The stock has witnessed an upward earnings estimate revision of 8% for the current year over the past 30 days. Its shares price has jumped 23.3% over the past three months.
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