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Why Is Macquarie (MIC) Down 3.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Macquarie (MIC - Free Report) . Shares have lost about 3.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Macquarie due for a breakout? 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's Q1 Earnings Beat Estimates, Revenues Rise

Macquarie reported adjusted earnings of $1.68 per share in first-quarter 2019, beating the consensus estimate of $1.50 by 12%. Notably, the figure was higher than 88 cents per share reported in the year-ago quarter.

Macquarie generated revenues of $482 million, up 3.2% year over year.  The top line was driven by solid operational growth in the Atlantic Aviation segment. Product revenues were flat year over year while Service revenues jumped 3.7%. However, revenues missed the Zacks Consensus Estimate of $488 million.

Segment Details

Revenues from the International-Matex Tank Terminals (IMTT) segment came in at $161 million, up 16% year over year. It represented 33.3% of the company’s first-quarter revenues. The segment’s EBITDA improved 33% to $104 million.

The Atlantic Aviation segment generated revenues of $258 million, up 4% year over year and accounted for 53.4% of the company’s overall revenues. The segment’s EBITDA rose 13% to $79 million.

Revenues in the MIC Hawaii segment were flat year over year at $64 million. It represented 13.3% of overall quarterly revenues. The segment’s EBITDA increased 25%.

Operating Costs

In the reported quarter, Macquarie’s cost of services and cost of product sales decreased 10.2% and 17% year over year, respectively.

Selling and administrative expenses were flat year over year at $80 million. Overall, operating expenses declined 8% to about $359 million.

Liquidity & Cash Flow

As of Mar 31, 2019, the company had cash and cash equivalents of $603 million and long-term debt of about $2,653 million. Its adjusted free cash flow for the quarter rose 20% year over year to $165 million.

Macquarie authorized cash dividend of $1.00 per share for the first quarter, payable May 16 to shareholders of record as on May 13.

Guidance

The company expects 2019 EBITDA in the range of $610-$635 million. It also expects to generate free cash flow in the band of $400-$445 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.12% due to these changes.

VGM Scores

Currently, Macquarie has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Macquarie has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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