MSCI To Report Q1 Earnings: What's In The Offing?

MSCI Inc. (NYSE:MSCI) is set to report first-quarter 2019 results on May 2.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 2.1%.

In the last reported quarter, MSCI reported adjusted earnings of $1.31 per share, which beat the Zacks Consensus Estimate by a penny and increased 13.9% year over year. Operating revenues increased 8% year over year to $361.7 million, slightly better than the consensus mark of $361 million.

At the end of the quarter, assets under management (AUM) were $695.6 billion in ETFs linked to MSCI indexes, down 6.5% year over year. Total Retention Rate was 92.9% at the end of the quarter.

Meanwhile, the Zacks Consensus Estimate for first-quarter earnings has risen by a couple of cents to $1.41 over the past 30 days, indicating growth of 7.6% from the year-ago reported figure. The consensus mark for revenues currently stands at $369.7 million, suggesting year-over-year growth of 5.2%.

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

Key Factors to Consider

MSCI is benefiting from growth in equity ETF-related revenues, non-ETF passive revenues, and revenues from exchange-traded futures and options products.

Notably, Assets in ETFs linked to MSCI indices increased 15.3% sequentially from $695.6 billion at the end of fourth-quarter 2018 to $802.2 billion at the end of first-quarter 2019.

Moreover, strong demand for custom and factor index modules and increasing adoption of the Environmental, Social and Governance (ESG) solution in the investment process is a key catalyst.

Notably, MSCI has completed integration of ESG in all its risk analytics systems. This is driving 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 expected to drive 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 has a Zacks Rank #2 but an Earnings ESP of -0.78%. 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.

Upland Software (NASDAQ:UPLD) has an Earnings ESP of +0.32% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet (NASDAQ:FTNT) has an Earnings ESP of +1.49% and a Zacks Rank #2.

Synopsis (NASDAQ:SNPS) has an Earnings ESP of +1.15% and a Zacks Rank #2.

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