Assessing Moelis Valuation After Market Dip and Latest Advisory Sector Developments

If you've been tracking Moelis, you're likely weighing your options: should you lean in, hold out, or look elsewhere? The stock's performance lately has been something of a mixed bag. Over the last week, it's down 5.5%, and the monthly dip sits at 3.4%. Even on a year-to-date basis, Moelis has lost 8.0%. But dig a little deeper, and a different narrative appears. The stock is up 6.6% over the past year, and if you’ve held on for the long haul, you’re looking at impressive three-year and five-year gains of 117.5% and 148.9%, respectively. Clearly, market sentiment has shifted over time, driven not just by short-term swings but also by how investors see opportunities in the advisory space.

Recent market developments have highlighted both growth potential and rising uncertainty across the financial sector, with investors recalibrating their risk tolerance. Moelis's latest moves seem to reflect that changing atmosphere, showing cautious optimism while plenty of eyes are watching for catalysts before making their next big bet.

Of course, price is only part of the story. When you zoom in on valuation, Moelis currently passes just 1 out of 6 major undervaluation checks, giving it a value score of 1. This raises real questions for anyone wondering if the stock is attractively priced or if its long-term results are already reflected in its valuation. Next, we'll dig into each of those valuation approaches, what they reveal about Moelis today, and toward the end, a smarter perspective will be offered for understanding whether this stock is truly worth your attention.

Moelis scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Moelis Excess Returns Analysis

The Excess Returns model looks beyond traditional metrics to evaluate how effectively a company generates profits above its cost of equity. It focuses on two fundamentals: how much profit Moelis earns for each dollar of equity, and whether those returns significantly outpace the required threshold set by investors.

For Moelis, the current Book Value stands at $6.96 per share, with a Stable EPS of $1.55 per share, which is based on the median Return on Equity over the past five years. The company's Cost of Equity is $0.56 per share, leaving an annual Excess Return of $1.00 per share. That means Moelis is averaging a strong 22.83% Return on Equity. Looking outward, the Stable Book Value is estimated at $6.81 per share, drawing on projections from three analysts.

When compared to these numbers, the Excess Returns model calculates an intrinsic value substantially lower than Moelis's current share price. This suggests the stock is trading at a 159.1% premium to its fair value, indicating significant overvaluation from this valuation perspective.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Moelis.

Our Excess Returns analysis suggests Moelis may be overvalued by 159.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Moelis Price vs Earnings

The Price-to-Earnings (PE) ratio is a favored metric for evaluating profitable companies like Moelis, as it directly connects a company’s share price to its actual earnings. This makes it especially helpful in understanding whether investors are paying a premium for expected growth or factoring in additional risk.

Typically, higher growth expectations and lower perceived risks push a company’s PE ratio upward, while riskier or slower-growing businesses tend to trade at lower multiples. For Moelis, the current PE ratio is 25x. This is slightly below the average for the Capital Markets industry, which is 27x, but above the peer average of 23x.

Rather than rely solely on broad benchmarks, Simply Wall St introduces a more tailored approach with its proprietary “Fair Ratio.” The Fair Ratio for Moelis stands at 19x, calculated using company-specific factors such as expected earnings growth, profit margins, its market cap, industry placement, and the particular risks it faces. This nuanced calculation goes a step further than industry and peer comparisons by capturing the unique risk-reward profile of the company.

With Moelis currently trading at a PE of 25x versus its Fair Ratio of 19x, the stock appears to be valued higher than warranted by its fundamentals and outlook, signaling possible overvaluation from this perspective.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Moelis Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple yet powerful tool that lets you craft a story for Moelis by connecting your unique view of the business to a concrete financial forecast, which then leads directly to your version of fair value. Instead of just looking at static numbers, Narratives allow you to pair your expectations about Moelis’s future revenue, earnings, margins, and risks with your beliefs about the company’s strategy and environment.

Using Narratives on Simply Wall St's Community page (trusted by millions of investors), you can easily see the impact of your outlook, track how your fair value stacks up against the current share price, and decide whether Moelis is a buy, hold, or sell for your situation. Each Narrative dynamically updates whenever fresh news or earnings are released, helping you stay aligned with the latest insights. For example, one investor who believes Moelis will capture major cross-border deal flow and sustain robust earnings growth might build a Narrative supporting a fair value of $90 per share. Another more cautious investor, concerned about margin pressure or deal volatility, arrives at a lower fair value around $65.

Do you think there's more to the story for Moelis? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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