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Moelis & Company (MC) Stock Tanks 10% on Q3 Earnings Miss

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Shares of Moelis & Company (MC - Free Report) plunged 10.1% following the release of its third-quarter 2018 results, after the market closed. Adjusted earnings of 62 cents per share missed the Zacks Consensus Estimate of 63 cents. However, the figure reflects an improvement of 9% from the prior-year quarter.

Results benefited from increase in revenues as M&A activities continued to rise. However, higher expenses acted as a headwind.

Net income (GAAP basis) was $44.9 million or 61 cents per share, up from $43.3 million or 48 cents per share in the prior-year quarter.

Revenues Improve, Costs Rise

Total revenues grew 22% year over year to $207.7 million. The rise was mainly driven by strength in M&A-related activity and higher average fees per completed transaction. However, it marginally lagged the Zacks Consensus Estimate of $207.9 million.

Total operating expenses (adjusted basis) were $153.6 million,increasing 19% year over year. Increase in compensation and non-compensations costs led to the rise.

Other income (adjusted basis) was $1 million, significantly lower than $15 million in the year-ago quarter.

As of Sep 30, 2018, Moelis & Company had cash and liquid investments of $231.6 million.

Our Take

Global expansion initiatives along with strategic partnerships in Japan, Australia and Mexico are expected to continue supporting Moelis & Company’s revenues. Also, a favorable operating environment, diversification across sectors and strong liquidity position aid growth. However, increasing operating expenses are likely to hurt its profitability to some extent.

Moelis & Company Price, Consensus and EPS Surprise

 

Moelis & Company Price, Consensus and EPS Surprise | Moelis & Company Quote

Currently, Moelis & Company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Investment Management Stocks

BlackRock’s (BLK - Free Report) third-quarter 2018 adjusted earnings of $7.52 per share outpaced the Zacks Consensus Estimate of $6.93. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Invesco (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimateby a penny. Results were primarily supported by slight GAAP revenue growth and a rise in AUM. However, increase in operating expenses was an undermining factor.

Blackstone (BX - Free Report) reported third-quarter 2018 economic net income of 76 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. Results benefited from increase in revenues, which was supported by growth in AUM and inflows. However, rise in expenses was the undermining factor.

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