Investment Thesis
Moelis demonstrates strong revenue growth (+27% YoY) but exhibits critical operational deterioration with net income declining 10.2% YoY, indicating margin compression and expense control issues. Most concerning is the massive disconnect between reported profitability ($38.4M net income) and negative operating cash flow (-$278.8M), suggesting severely poor earnings quality and unsustainable working capital dynamics.
Strengths
- Strong revenue growth of 27% YoY demonstrating market demand and business momentum
- Conservative balance sheet with zero debt and $152.9M cash position providing financial flexibility
- Reasonable profitability margins at 12.7% operating margin and 12.0% net margin for financial services sector
Risks
- Net income declining 10.2% YoY despite 27% revenue growth indicates deteriorating profitability and failed operating leverage
- Severe negative operating cash flow of -$278.8M with massive disconnection from net income suggests poor earnings quality and critical working capital issues
- Weak returns on equity (7.9%) and assets (3.0%) indicate inefficient capital deployment and poor capital allocation
Key Metrics to Watch
- Operating cash flow and working capital components - the -$278.8M burn is unsustainable
- Net income margin trend and expense-to-revenue ratio - need to reverse deteriorating profitability despite revenue growth
- Return on equity and return on assets - critical to improve from current weak 7.9% ROE and 3.0% ROA levels
Financial Metrics
Revenue
319.8M
Net Income
38.4M
EPS (Diluted)
$0.75
Free Cash Flow
-291.6M
Total Assets
1.3B
Cash
152.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
12.7%
Net Margin
12.0%
ROE
7.9%
ROA
3.0%
FCF Margin
-91.2%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
51.7%
Interest Coverage
N/A
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T15:40:54.405030 |
Data as of: 2026-03-31 |
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