Macquarie (MIC) Down 45.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Macquarie (MIC). Shares have lost about 45.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Macquarie due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Macquarie's Q4 Earnings & Revenues Miss Estimates

Macquarie reported income per share of 16 cents in fourth-quarter 2019. The bottom line compared favorably with loss of 1 cent per share reported in the year-ago quarter. Lower operating expenses were primarily responsible for the improvement.

On an adjusted basis, the company’s earnings came in at 90 cents per share, missing the Zacks Consensus Estimate of $1.03.

Macquarie generated revenues of $424 million, down 3% year over year. The decline was attributable to divesture of some of its businesses in 2018. Product revenues came in at $60 million, a decrease of 3%. Service revenues declined 3% to $364 million. The top line missed the Zacks Consensus Estimate of $442 million.

In 2019, Macquarie generated revenues of $1,727 million, down 2% on a year-over-year basis.

Segment Details

Revenues from International-Matex Tank Terminals came in at $117 million, down 6% year over year. It represented 27.6% of the company’s fourth-quarter revenues. The segment’s EBITDA decreased 11% to $58 million.

Atlantic Aviation generated revenues of $248 million, flat year over year and accounted for 58.5% of the company’s overall revenues. The segment’s EBITDA increased 4% to $71 million.

Revenues in MIC Hawaii came in at $60 million, down 9% year over year. It represented 14.2% of overall quarterly revenues. The segment’s EBITDA decreased 13% to $14 million.

Operating Costs

In the fourth quarter, Macquarie’s cost of services decreased 5% to $169 million on a year-over-year basis, whereas cost of product sales declined 27% to $37 million.

Selling and administrative expenses were $89 million, up 2% year over year. Overall, operating expenses declined 5% to about $369 million.

Liquidity & Cash Flow

As of Dec 31, 2019, the company had cash and cash equivalents of $357 million, down from $589 million on Dec 31, 2018. Long-term debt was $2,654 million, up from $2,653 million recorded at the end of 2018. In 2019, the company generated net cash of $468 million from operating activities, down 1.1%.

Macquarie authorized cash dividend of $1 per share for the fourth quarter, payable Mar 11 to shareholders of record as on Mar 6.

Guidance

The company expects 2020 adjusted EBITDA in the range of $575-$600 million. It expects to generate adjusted free cash flow in the band of $360-$400 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -12.8% due to these changes.

VGM Scores

At this time, Macquarie has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Macquarie has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.