It has been about a month since the last earnings report for Envestnet (ENV). Shares have lost about 42% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Envestnet 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.
Envestnet Beats Q4 Earnings and Revenue Estimates
Envestnet posted better-than-expected results for the fourth quarter of 2019.
The company delivered earnings and revenue surprises of 1.47% and 0.11%, respectively, for the quarter. Quarterly adjusted EPS of 69 cents increased 13% year over year. Revenues of $239.9 million increased 14% year over year.
Quarterly Numbers in Detail
Adjusted revenues of $242.5 million increased 15% year over year. Adjusted net revenues grew 18% to $177.1 million.
Asset-based recurring revenues of $128.7 million increased 5% year over year, representing 54% of total revenues. Subscription-based recurring revenues of $102.9 million were up 32% from the prior-year period, representing 43% of total revenues. Professional services and other non-recurring revenues decreased 11% year over year to $8.3 million. PortfolioCenter and PIE tech acquisitions contributed revenues of $2.3 million and $12.2 million, respectively.
Adjusted EBITDA came in at $61.5 million, up 30% year over year. Adjusted net income of $37.1 million increased 28%.
Envestnet ended the quarter with cash and cash equivalent balance of $82.5 million, compared with $71.6 million at the end of the prior quarter. The company generated around $46.9 million of cash from operating activities and CapEx was $3.8 million.
For the first quarter of 2020, Envestnet expects adjusted EPS to be 45 cents. Total revenues are expected between $241.7 million and $243.7 million. Adjusted revenues are anticipated between $242 million and $244 million. Adjusted net revenues are projected in the range of $172 million to $174.5 million. The company expects adjusted EBITDA in the range of $46 million to $47 million.
For 2020, adjusted EPS is expected between $2.22 and $ 2.27. Total revenues are anticipated between $1017.5 million and $1027.5 million. The company expects adjusted revenues to be between $1,018 million and $1,028 million. Adjusted net revenues are expected in the range of $724 million to $736 million. The company projects adjusted EBITDA of $220 million to $224 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 -30.81% due to these changes.
Currently, Envestnet has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Envestnet has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.