A month has gone by since the last earnings report for Envestnet (ENV). Shares have added about 29% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Envestnet due for a pullback? 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 drivers.
Envestnet Surpasses Q3 Earnings Estimates
Envestnet reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues surged year over year.
Adjusted earnings (excluding 58 cents from non-recurring items) per share of 45 cents outpaced the Zacks Consensus Estimate by 7.1% but declined 26.2% year over year. The reported figure lies above the guided range of 40-42 cents.
Adjusted revenues of $306.7 million also beat the consensus mark by 1.3% and climbed 1.2% year over year. The reported figure lies above the guided range of $301.5-$303.5 million.
Quarterly Numbers in Detail
Asset-based recurring revenues of $177.13 million decreased 3.7% year over year, contributing 58% to total revenues. Subscription-based recurring revenues of $123.7 million were up 8.9% from the prior-year quarter’s level, contributing 40.3% to total revenues. Professional services and other non-recurring revenues increased 6.3% year over year to $5.8 million.
Adjusted EBITDA came in at $53.5 million, down 19% year over year.
Envestnet ended third-quarter 2022 with a cash and cash equivalent balance of $241.3 million compared with $338 million at the end of the prior quarter. Long-term debt was $509 million compared with $508.3 million at the end of the prior quarter.
ENV generated $33.6 million cash from operating activities. CapEx was $3.97 million.
Outlook
For fourth-quarter 2022, Envestnet expects adjusted earnings per share between 42 cents and 43 cents (prior view: 40-42 cents).
For the fourth quarter of 2022, total revenues are estimated between $294 million and $296 million (prior view: $301.5 million and $303.5 million). Envestnet expects adjusted EBITDA in the band of $52-$54 million (prior view: $51-$53 million).
For 2022, Envestnet now expects adjusted EPS between $1.82 and $1.84 compared with the prior-guided range of $1.84-$1.89. Total revenues are now anticipated between $1.241 billion and $1.243 billion compared with the prior-guided range of $1.255-$1.260 billion.
For 2022, ENV now projects adjusted EBITDA of $218-$220 million compared with the prior-guided range of $223-$227 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Envestnet has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 C. 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 these revisions indicates a downward shift. Notably, Envestnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Envestnet belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Fiserv (FISV), has gained 4.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Fiserv reported revenues of $4.27 billion in the last reported quarter, representing a year-over-year change of +7.9%. EPS of $1.63 for the same period compares with $1.47 a year ago.
Fiserv is expected to post earnings of $1.93 per share for the current quarter, representing a year-over-year change of +22.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
Fiserv has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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