Moelis & pany(US:MC) ZACKSยท2025-09-18 16:11Core Insights - Moelis & Co. (MC) shares have increased by 33.5% over the past three months, outperforming the Finance sector and the S&P 500 index, while also surpassing Lazard Inc. (LAZ) but underperforming Evercore, Inc. (EVR) [1][10] Factors Supporting Moelis & Co. Stock - The Federal Reserve's recent interest rate cut of 25 basis points is expected to enhance M&A activity, which will benefit Moelis & Co.'s advisory revenues [4][5] - Moelis & Co. has shown solid organic performance with a 10% compound annual growth rate (CAGR) over the five years ending in 2024, despite revenue declines in certain years due to M&A softness [6][7] - The company has diversified its operations across various sectors and regions, with the top 10 transactions accounting for less than 25% of total revenues [7][8] Financial Performance and Estimates - The Zacks Consensus Estimate predicts a revenue increase of 24% in 2025 and 13.5% in 2026, with current year revenue estimated at $1.48 billion and next year at $1.68 billion [13][14] - Earnings estimates for 2025 and 2026 suggest increases of 37.9% and 28.7%, respectively, with upward revisions noted in the past 30 days [16][18] Valuation and Returns - Moelis & Co. stock is currently trading at a forward price-to-earnings (P/E) ratio of 24.92, which is above the industry average of 14.95, indicating a premium valuation [20][22] - The company boasts a return on equity (ROE) of 42.72%, significantly higher than the industry average of 12.06%, reflecting efficient capital allocation [23][27] Challenges and Outlook - Rising expenses, particularly in compensation, have been a concern, with a five-year CAGR of 10.1% noted [27] - Geopolitical risks and foreign currency fluctuations may impact overseas revenues, which accounted for 22.6% of total revenues in the first half of 2025 [28] - Despite valuation concerns, the potential for increased M&A activity and a solid balance sheet support the attractiveness of Moelis & Co. as an investment [29]