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Value

Tracey Ryniec

Calamos Asset Management, Inc.

CLMS

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With the stock rally now going on 2 years (and counting), investors are finally returning to riskier assets. Calamos Asset Management, Inc. (CLMS - Snapshot Report) saw assets under management climb 8% in 2010 compared to 2009. This Zacks #1 Rank (strong buy) also has attractive valuations, with a price-to-book ratio of 1.0.

Calamos provides investment management to institutions and individuals through equity, convertible, defensive equity, fixed income and alternative investment strategies.

As of Dec 31, 2010, assets under management (AUM) totaled $35.4 billion, up $2.7 billion from the end of 2009.

Calamos Surprised By 21% in the Fourth Quarter

On Feb 3, Calamos reported fourth quarter results and beat the Zacks Consensus by 4 cents a share. Earnings per share were 28 cents compared to the consensus of 24 cents. It was the fifth straight earnings surprise.

Revenue rose 6% to $86 million in the fourth quarter. Investment management fees rose by 9% to $63.7 million compared to the year ago period.

Compensation increased 26%, however, to $18 million, mainly due to performance-based incentive compensation. Marketing and sales promotion expenses also rose to $4.3 million from $2.7 million a year ago.

Fourth quarter revenues were $86.0 million, an increase of 6% from $81.3 million during the same period in 2009. For the three months ended December 31, 2010, operating expenses were $50.3 million, an increase of $5.1 million, or 11%, from the same period in 2009.

Assets under management rose 9% in the quarter compared with Q3. It saw growth in equities in the global, international and emerging market segments.

Dividend Raised 27%

The company also increased the dividend by 27%, or 2 cents a share, to 9.5 cents per share. It was paid to shareholders on Mar 4.

That is a very attractive dividend yield of 2.4%.

Zacks Consensus Estimates Rise

The 2011 Zacks Consensus Estimate has risen by 6 cents to $1.07 in the last 60 days. Earnings per share are expected to grow 8.3% over 2010.

Analysts also see another 13.1% growth in 2012, as the Zacks Consensus Estimate has risen to $1.21 from $1.10 in the prior 2 months.

Calamos is scheduled to report first quarter results on May 10.

Valuations Still Attractive

In addition to having a P/B ratio within the "value" range of under 3.0, Calamos also has a price-to-sales ratio of 0.98 which means it is just on the edge of being undervalued.

The company also has a forward P/E of 14.7. That is just under the 15 cut-off I use to find value stocks so it's not the cheapest stock out there but it's still an attractive valuation.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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