Update: Greenhill Earnings

Aug.12.14 | About: Greenhill & (GHL)

Summary

The company managed to beat 2Q consensus on both the top and bottom lines.

We still remain bullish on the company for the long term given the strong and growing M&A market.

The recent quarter was another positive that we saw coming as it relates to a commitment to advisory services.

Greenhill (NYSE:GHL) posted 2Q earnings of $0.27 a share (beating consensus of $0.22), and revenue marginally beat expectations. Total revenues were down 27% y/y. The company notes that it's tough to compare company performance on a quarter by quarter basis, given the seasonality of deals.

Management has also pointed out that there are a number of announced transactions that should lead to future revenues. Analysts still expect the company to grow earnings at an annualized rate that's over double that of the industry average for the next five years. Greenhill is expected to grow EPS at 22% annually for the next half decade. It's also worth noting that Greenhill is focused on a combination of revenue growth and shareholder returns.

Shares are down 9% since we first covered Greenhill back in August of last year. While this is a bit disappointing, the stock is still offering a 3.9% dividend yield. As we mentioned in August,

...we think that Greenhill's overall business model is superior to the large banks in terms of advisory. We believe that Greenhill's client-focused and conflict-free advisory model continues to differentiate them and allows them to attract new clients away from its larger competitors. This doesn't include the structural and regulatory challenges that the big banks face.

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