Greenhill & Co. Earnings: Here’s Why the Stock is Rising Now

Greenhill & Co., Inc. (NYSE:GHL) delivered a profit and missed Wall Street’s expectations, BUT beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are up 30%.

Greenhill & Co., Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 642.86% to $0.52 in the quarter versus EPS of $0.07 in the year-earlier quarter.

Revenue: Rose 83.2% to $86.69 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Greenhill & Co., Inc. reported adjusted EPS income of $0.52 per share. By that measure, the company missed the mean analyst estimate of $0.53. It beat the average revenue estimate of $80.48 million.

Quoting Management: “We are pleased with our quarterly and first half results relative to what has continued to be a very difficult transaction environment. And we remain on track to achieve each of our four ongoing objectives again this year: increasing market share, maintaining the highest profit margin among our peers, paying a strong dividend and maintaining a flat or declining share count. Our year to date advisory revenues were up 39% compared to last year, and our pre-tax profit margin was 28%. While there were far fewer transactions in the market generally, our number of active clients and level of retainer fees year to date were comparable to last year, suggesting a continued high level of engagement with clients which should eventually lead to more transaction announcements. We particularly benefited in the first half from a larger number of lead roles on major transactions, resulting in more large fees compared to last year. Our results were heavily driven by activity in North America, consistent with market activity generally. And our revenues were heavily weighted toward traditional M&A, as highly accommodating financing markets meant there was little restructuring activity. Our revenue from capital raising advisory was likewise lower in the first half, but a strong backlog there makes us hopeful for an increase for the full year,” Robert F. Greenhill, Chairman, said.

Key Stats (on next page)…

Revenue increased 8.92% from $79.59 million in the previous quarter. EPS increased 15.56% from $0.45 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.35 to a profit $0.36. For the current year, the average estimate has moved down from a profit of $2.08 to a profit of $1.85 over the last ninety days.

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