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Will Portfolio Strength & User Growth Aid MSCI Q2 Earnings?

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MSCI Inc. (MSCI - Free Report) is set to report second-quarter 2019 results on Aug 1.

The company’s earnings beat the Zacks Consensus Estimate over the trailing four quarters, the average positive surprise being 4%.

In the last reported quarter, MSCI reported adjusted earnings of $1.55 per share, which beat the Zacks Consensus Estimate by 14 cents and increased 18.3% year over year.

Operating revenues were up 5.7% year over year to $371.4 million in the first quarter, slightly better than the consensus mark of $370 million.

At the end of the quarter, assets under management (AUM) were $802.2 billion in ETFs linked to MSCI indexes, up 4.9% year over year. Total Retention Rate was 95.2% at the end of the quarter.

MSCI Inc Price and EPS Surprise

 

MSCI Inc Price and EPS Surprise

MSCI Inc price-eps-surprise | MSCI Inc Quote

Meanwhile, the Zacks Consensus Estimate for second-quarter earnings has remained steady at $1.49 over the past seven days, indicating growth of 14.6% from the year-ago quarter’s reported figure. The consensus mark for revenues currently stands at $381.5 million, suggesting year-over-year growth of 5.1%.

Let’s see how things are shaping up for this announcement.

Key Factors to Consider

MSCI is expected to benefit from strong demand for custom and factor index modules. Increasing adoption of the Environmental, Social and Governance (ESG) solution in the investment process is a key catalyst.

Notably, MSCI has completed the integration of ESG in all its risk analytics systems. This is spurring demand for the company’s multi-asset class risk and performance analytics solution.

Additionally, growing passive and index-based investing is driving demand for the company’s Index products, which have gained strong traction among client segments, like wealth management, banks and broker dealers, and hedge funds.

These factors are anticipated to boost the top line in the soon-to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has a good chance of beating estimates. Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

MSCI carries a Zacks Rank #4 but has an Earnings ESP of +0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are three stocks that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat in this earnings season.

CGI Group (GIB - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zendesk has an Earnings ESP of +7.84% and a Zacks Rank #2.

CACI International (CACI - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank #2.

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