Why Is Moelis (MC) Down 23.1% Since Last Earnings Report?

Core Viewpoint - Moelis & Company has shown significant improvement in its financial performance, with adjusted earnings and revenues surpassing expectations, despite facing increased operating expenses [2][4][5]. Financial Performance - Adjusted earnings for Q4 were $1.18 per share, exceeding the Zacks Consensus Estimate of 46 cents, and improved from a loss of 6 cents per share in the prior-year quarter [2]. - Net income on a GAAP basis was$99.8 million, compared to a loss of $6.5 million in the prior-year quarter [3]. - Total revenues for the quarter reached$438.7 million, a substantial increase year over year, driven by higher average fees per completed transaction, and surpassed the Zacks Consensus Estimate of $338.7 million [4]. Revenue and Expenses - For 2024, total revenues were reported at$1.19 billion, reflecting a 40% increase and exceeding the consensus estimate of $1.10 billion [4]. - Total operating expenses for the quarter were$307.2 million, a 37% increase attributed to rising compensation and benefits costs as well as non-compensation expenses [5]. - Other income for the quarter was $6 million, up 17$4 million [5]. Liquidity and Outlook - As of December 31, 2024, the company had cash and liquid investments totaling $560.4 million, with no debt or goodwill [5]. - Management anticipates an increase in non-compensation expenses in 2025 due to higher technology, occupancy, and travel expenses, along with rising compensation expenses due to a hiring spree [6]. Market Sentiment and Estimates - There has been an upward trend in estimates revisions, with the consensus estimate shifting by 39.81% recently [7]. - Moelis has received a Zacks Rank of 1 (Strong Buy), indicating expectations for above-average returns in the coming months [10].