Morningstar | Greenhill's 2018 Performance Demonstrates Turnaround
Greenhill's 2018 performance demonstrates the success of its turnaround since the firm's 2017 recapitalization. Revenue for the past year was $352 million, a 47% increase from the previous year, and the company reported diluted earnings per share of $1.42. However, 2018 revenue was only 5% higher than in 2016, showing why the company chose to do a recapitalization. Quarterly revenue in 2018 was remarkably stable, ranging from $87 million to $89 million, but the $89 million Greenhill booked during the fourth quarter was a bit disappointing when compared with peers that reported much stronger fourth-quarter advisory revenue. We don't anticipate making a material change to our $23.50 fair value estimate for narrow-moat Greenhill.One area that performed well for the company last year was its European operations. European revenue more than doubled from the previous year and comprised 32% of total advisory revenue during 2018. We continue to believe there's likely more time left to grow investment banking revenue in Europe than there is in the United States, where we are likely near a capital market peak.
We expect the next year or two to be interesting from a capital deployment standpoint for Greenhill. The company is 92% done with its current share repurchase program. The firm's board and management can now go in many directions by continuing with repurchases, retiring debt more rapidly, or trying to re-establish Greenhill shares as a high-dividend-paying stock (the current quarterly dividend is $0.05 per share compared with $0.45 prior to the recapitalization). Greenhill could also just hold on to its cash, allowing it to be an opportunistic buyer during any downturn or as buffer for contractual debt payments.
Greenhill & Co is an investment bank that provides financial advice on domestic and cross-border mergers and acquisitions, divestitures, restructurings, financings, capital raising and other transactions to corporations, partnerships, institutions and governments. The company serves as an advisor to its clients throughout the world on a collaborative integrated basis from its offices located in the U.S., Australia, Brazil, Canada, Germany, Hong Kong, Japan, Spain, Sweden, and the U.K. The company provides corporate advisory services related to mergers and acquisitions and financings and restructurings and capital advisory services related to sales or capital raises pertaining to alternative assets.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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