Moelis (MC)

Investment banking firm Moelis & Company (NYSE:MC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.2% year on year to $487.9 million. Its non-GAAP profit of $1.13 per share was 35.4% above analysts’ consensus estimates.

Company Overview

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.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

Moelis & Company competes with other independent investment banks such as Lazard (NYSE:LAZ), Evercore (NYSE:EVR), and PJT Partners (NYSE:PJT), as well as the advisory divisions of larger financial institutions like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Moelis grew its revenue at a decent 10.2% compounded annual growth rate. Its growth was slightly above the average financials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Moelis’s annualized revenue growth of 33.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Moelis reported year-on-year revenue growth of 11.2%, and its $487.9 million of revenue exceeded Wall Street’s estimates by 10%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Investment Banking & Brokerage companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Financials companies manage interest-bearing assets and liabilities, making the interest income and expenses included in pre-tax profit essential to their profit calculation. Taxes, being external factors beyond management control, are appropriately excluded from this alternative margin measure.

Over the last five years, Moelis’s pre-tax profit margin has risen by 7.3 percentage points, going from 34.4% to 21.3%. Luckily, it seems the company has recently taken steps to address its expense base as its pre-tax profit margin expanded by 24.7 percentage points on a two-year basis.

Moelis’s pre-tax profit margin came in at 28.3% this quarter. This result was 3.1 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Moelis’s flat EPS over the last five years was below its 10.2% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we 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.

In Q4, Moelis reported adjusted EPS of $1.13, down from $1.18 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Moelis’s full-year EPS of $2.98 to grow 13.9%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Moelis has averaged an ROE of 39.6%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Moelis has a strong competitive moat.

It was good to see Moelis beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $71.00 immediately following the results.

Updated: February 4, 2026 at 4:27 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Moelis is a high-quality business worth owning. For starters, its revenue growth was good over the last five years and is expected to accelerate over the next 12 months. And while its declining pre-tax profit margin shows the business has become less efficient, its stellar ROE suggests it has been a well-run company historically.

Moelis’s P/E ratio based on the next 12 months is 20.9x. There’s some optimism reflected in this multiple, but we don’t mind owning a high-quality business, even if it’s slightly expensive. It’s often wise to hold investments like this for at least three to five years, as the power of long-term compounding negates short-term price swings that can accompany relatively high valuations.

Wall Street analysts have a consensus one-year price target of $79.30 on the company (compared to the current share price of $71.00).