Moelis & Company Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, Moelis & Company (NYSE:MC) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 2.4% to hit US$264m. Statutory earnings per share (EPS) came in at US$1.00, some 8.1% above whatthe analysts had expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Moelis

Taking into account the latest results, Moelis' nine analysts currently expect revenues in 2021 to be US$1.04b, approximately in line with the last 12 months. Statutory earnings per share are expected to descend 14% to US$3.26 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.03b and earnings per share (EPS) of US$3.26 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$59.13, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Moelis analyst has a price target of US$63.00 per share, while the most pessimistic values it at US$52.00. This is a very narrow spread of estimates, implying either that Moelis is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.4% by the end of 2021. This indicates a significant reduction from annual growth of 8.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.1% annually for the foreseeable future. It's pretty clear that Moelis' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Moelis' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$59.13, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Moelis. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Moelis going out to 2023, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Moelis (1 is a bit unpleasant) you should be aware of.

If you’re looking to trade Moelis, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.