Greenhill & Co. Earnings: Here’s Why Investors are Happy Now

Greenhill & Co., Inc. (NYSE:GHL) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.70%.

Markets are at 5-year highs! Discover the best stocks to own. Click here for our fresh Feature Stock Pick now!

Greenhill & Co., Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 15.09% to $0.45 in the quarter versus EPS of $0.53 in the year-earlier quarter.

Revenue: Decreased 3.44% to $79.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Greenhill & Co., Inc. reported adjusted EPS income of $0.45 per share. By that measure, the company missed the mean analyst estimate of $0.68. It missed the average revenue estimate of $102.1 million.

Quoting Management: “The first quarter saw a return to the difficult market conditions that have prevailed over much of the past 5 to 6 years, and in that context we are pleased with our financial results for the quarter. Our advisory revenues were up 11% compared to the prior year first quarter. Within that, we benefited from transaction completion fees at a higher level than the quarterly pace for the full year 2012, while transaction announcement fees were meaningfully lower than the full year rate for 2012. Similarly, fund placement fees, which tend to be weighted toward year end, were down from the full year rate for 2012. It is encouraging that our number of active clients and total retainer fees were consistent with last year’s results, indicating a continued high level of active assignments, but as with the market more broadly we saw relatively few transactions get to the announcement stage. Nonetheless, our revenues were sufficient to allow us to achieve a 27% pre-tax profit margin, driven by continued discipline on compensation and non-compensation costs. With the data now clear that we continue to be in a relatively slow transaction environment, we believe our high profit margin, strong dividend and flat share count relative to our large and small competitors will continue to be important distinguishing factors for us, as they have been throughout our 9 years as a public company,” Robert F. Greenhill, Chairman, said.

Key Stats (on next page)…

Revenue decreased 13.9% from $92.33 million in the previous quarter. EPS decreased 10% from $0.50 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.61 to a profit $0.58. For the current year, the average estimate has moved down from a profit of $2.51 to a profit of $2.3 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)