Moelis & Company (MC) Beats On Q2 Earnings As Costs Decline

Moelis & Company’s (NYSE:MC) second-quarter 2019 adjusted earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 34 cents. However, the figure compared unfavorably with the prior-year quarter’s earnings of 78 cents.

Results benefited from lower expenses. Moreover, the company’s liquidity position remained strong. However, a decline in revenues hurt results to some extent.

Net income for the reported quarter (GAAP basis) was $37.7 million or 54 cents per share, down from $53.1 million or 72 cents recorded in the prior-year quarter.

Revenues & Costs Decline

Total revenues declined 30.3% year over year to $153.5 million. This decrease was mainly due to a fall in the number of transactions completed in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $146.8 million.

Total operating expenses (adjusted basis) were $115.7 million, down 29.2% year over year. Fall in both compensation and benefits costs, and non-compensation expenses led to this decline.

Other income was $4.3 million, up from $1.3 million recorded in the year-ago quarter.

As of Jun 30, 2019, the company had cash and liquid investments of $108.4 million.

Share Repurchases

During the quarter, it repurchased 355,039 shares for $12.6 million.

Our Take

While the company’s global expansion initiatives along with strategic partnerships in Japan and Mexico will likely support its top line; its hiring trend, as it expands operations, is likely to lead to a persistent increase in overall costs. Thus, higher expenses will likely hamper bottom-line growth to an extent.

Currently, Moelis & Company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Investment Management Stocks

Invesco (NYSE:IVZ) reported second-quarter 2019 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 57 cents. However, the bottom line was 1.5% below the prior-year quarter figure. Results benefited from an improvement in assets under management (AUM) and rise in revenues, driven by the OppenheimerFunds buyout.

BlackRock, Inc.’s (NYSE:BLK) second-quarter adjusted earnings of $6.41 per share lagged the Zacks Consensus Estimate of $6.52. Moreover, the figure was 3.8% lower than the year-ago quarter’s number. Results were hurt by a decline in revenues along with higher expenses. Nevertheless, growth in AUM supported results to some extent.

Blackstone (NYSE:BX) reported second-quarter distributable earnings of 57 cents, beating the Zacks Consensus Estimate of 50 cents. Moreover, the figure reflected improvement from 56 cents earned in the prior-year quarter. Results benefited from growth in AUM and lower expenses. However, a decline in revenues acted as a headwind.

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