Moelis (MC) came out with a quarterly loss of $0.06 per share versus the Zacks Consensus Estimate of a loss of $0.11. This compares to earnings of $0.33 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents a revenue surprise of 45.45%. A quarter ago, it was expected that this investment bank would post earnings of $0.05 per share when it actually produced a loss of $0.15, delivering a -400% surprise.
Over the past four quarters, the company has topped consensus EPS estimates just once.
Grinded
The sustainability of the stock’s immediate price movement based on the recently released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.
Moelis shares have lost about 2.5% since the start of the year versus the S&P 500’s gain of 3.9%.
What’s Next for Moelis?
While Moelis has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the next quarter(s), but also how these expectations have changed recently.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions on their own or rely on a proven valuation tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Prior to this earnings release, the rating revisions trend for Moelis: unfavorable. While the size and direction of rating revisions could change after the company’s recently released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the stock is expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates change for the upcoming quarters and current fiscal year in the coming days. The current consensus EPS estimate is $0.10 on $224.77 million in revenue for the upcoming quarter and $1.60 on $1.1 billion in revenue for the current fiscal year.
Investors should consider the fact that the outlook for the industry can have a material impact on the stock’s performance as well. According to the Zacks Industry Rank, Financial – Investment Bank is currently in the top 41% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Robinhood Markets, Inc. (HOOD), another stock in the same industry, has yet to report results for the quarter ended December 2023. The results are expected to be released on February 13.
This company expects a quarterly loss of $0.01 per share in its next report, which represents a year-over-year change of +94.7%. The consensus EPS estimate for the quarter was revised 25% higher over the last 30 days to the current level.
The earnings of Robinhood Markets, Inc. is expected to be $ 453.99 million, more than 19.5% from the previous year.
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