Why is Moelis (MC) up 12.7% since its last earnings report?

A month has passed since the last earnings report of Moelis (MC). Shares have risen about 12.7% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Moelis headed for a decline? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

High profits of Moelis & Company in the first quarter thanks to growing revenues y/y

Moelis & Company’s first-quarter 2024 adjusted earnings per share of 22 cents easily topped the Zacks Consensus Estimate of 11 cents. Financial results compared favorably with the 5 cents earned in the prior-year quarter.

The results were positively influenced by the increase in revenues and other income. The company also had a solid liquidity position during the quarter. However, the weakening factor was the increase in spending.

Net income (GAAP) was $17.5 million, a significant increase from $3.6 million in the prior-year quarter.

Revenues are growing, expenses are growing

Total revenue (GAAP) increased 15% year-over-year to $217.5 million. This was due to an increase in fees for restructuring and capital market transactions. The top line, however, missed the Zacks Consensus Estimate of $222.7 million.

Total operating expenses (GAAP) were $211.7 million, an increase of 12%. This increase resulted from an increase in both the costs of salaries and benefits, as well as other costs. Our estimate for total operating costs was $223.8 million.

Other revenue (GAAP) for the reported quarter was $4.2 million, up from $1.7 million in the prior-year quarter.

As of March 31, 2024, the company had cash and liquid investments of $124.9 million, net of debt and goodwill.

Perspectives

Management expects adjusted non-compensation costs to be nearly $46 million per quarter.

How have estimates changed since then?

It turns out that new estimates have been trending downward over the past month.

As a result of these changes, the consensus estimate moved by -42.55%.

VGM results

Moelis currently has a Poor Growth Rating of F, which indicates the same momentum score. Following exactly the same trajectory, the stock is rated F for value, putting it in the bottom quintile for this investment strategy.

Overall, the company’s overall VGM score is F. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Moelis carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

The story continues

Industry player performance

Moelis belongs to the Zacks Financial – Investment Bank industry. Another stock in the same industry, Goldman Sachs (GS), has gained 9.1% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

Goldman reported revenues of $14.21 billion in the most recent quarter, representing a year-over-year change of +16.3%. EPS of $11.58 in the same period compared to $8.79 a year earlier.

Goldman is expected to report earnings per share of $8.87 for the current quarter, representing a +188% change from the prior-year quarter. The Zacks Consensus Estimate has changed +4.9% over the past 30 days.

The overall direction and magnitude of estimate revisions translates into a Zacks Rank #1 (Strong Buy) for Goldman. The stock also has a VGM Rating of F.

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