Shareholders of Moelis would probably like to forget the past six months even happened. The stock dropped 24.6% and now trades at $54.11. This might have investors contemplating their next move.
Following the pullback, is now a good time to buy MC? Find out in our full research report, it’s free.
Why Does Moelis Spark Debate?
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Two Things to Like:
1. Long-Term Revenue Growth Shows Momentum
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Thankfully, Moelis’s 10.2% annualized revenue growth over the last five years was decent. Its growth was slightly above the average financials company and shows its offerings resonate with customers.
2. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
For Moelis, its two-year annual EPS growth of 311% was higher than its five-year trend. This acceleration made it one of the faster-growing financials companies in recent history.
One Reason to be Careful:
Growing TBVPS Reflects Strong Asset Base
In the financials industry, tangible book value per share (TBVPS) provides the clearest picture of shareholder value, as it focuses on concrete assets while excluding intangible items that may not hold value during challenging times.
Although Moelis’s TBVPS declined at a 1.2% annual clip over the last five years. the good news is that its growth inflected positive over the past two years as TBVPS grew at an incredible 21.2% annual clip (from $5.26 to $7.73 per share).
Final Judgment
Moelis’s positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 15.8× forward P/E (or $54.11 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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