BENCHMARKS USED
Compared with MOELIS USA, Greenhill, Houlihan Lokey, Evercore, PJT and Lazards. All listed on NYSE.
PROFITABILITY
Looked at EBIT to SALES and MOELIS at 30% and compares with others at an average of 20% with range of 8 to 27%. MOELIS looks good on this metric and highest of all.
RETURN ON ASSETS
Looked at EBIT to TOTAL ASSETS. MOELIS at 28% and compares with others at an average of 25% with range of 11 to 42%. MOELIS looks reasonable and mid range here. GOODWILL TO TOTAL ASSETS
With these businesses a lot of your price is goodwill.
At $2.35 with MOELIS around 73% of your price is goodwill. Compares with others at an average of 74% and range of 52 to 86%. MOELIS is third cheapest on this metric.
CASH TO TOTAL ASSETS
MOELIS evidently listing for growth and to raise some capital. At listing cash to total assets is 63% . Compares with others at an average of 28% and range of 15 to 63%.
Appears that MOELIS should be able to increase use of cash and earn more EBIT.
PRICING
And now to the all important pricing.
There are two outliers, Greenhill, really cheap, and PJT , really expensive.
In my view MOELIS should trade at $2.35 and could go as high as $2.50 to $2.70 if it trades in line with the average of all the other players.
OTHER FACTORS
Sentiment at this stage seems to be in favour of MOELIS .
Moeilis is significantly smaller than all the benchmarks used.
With a free float of about $60m it will be a small cap and large funds will not have a mandate to invest in it. It may therefore fall off the investing markets radar.
It is still a very high priced stock in a market where all the pricing is outrageous.
CONCLUSION
If everything holds then probably limited downside with a bit of upside.
I will be making a small punt if I can get some stock.
It is certainly not being priced for a certain stag. Pity.
