Earnings momentum for Och-Ziff Capital Management Group LLC have been on the rise since this investment manager posted impressive second quarter results in early August. Now this Zacks #2 Rank (Buy) is preparing to report third quarter results later this month. The company has surpassed quarterly earnings estimates in 2 of the past 3 quarters, and pays a regular quarterly dividend that yields a solid 5.5%.
Q3 Release Coming Up
Och-Ziff Capital is expected to release its third quarter earnings on October 29. The Zacks Consensus Estimate is at 13 cents per share on expected revenue of $128.0 million.
On August 2, Och-Ziff Capital reported second quarter 2012 earnings per share of 36 cents, topping the Zacks Consensus Estimate by 177% and last years earnings by 176.9%. The upsurge was mainly attributed to growth in total revenues and lower expenses.
Economic income revenues for the company climbed 7.0% year-over-year to $141.9 million. Total revenues stood at $178.4 million, up 21.1% year over year. Moreover, total expenses decreased to $476.1 million from $492.2 million in the year-ago period, primarily aided by lower compensation and benefits expenses.
Upward Earnings Estimate Revisions
The Zacks Consensus Estimate for 2012 is up 3.6% in the past 2 months to $1.15 per share. The Zacks Consensus Estimate for 2013 is at $1.27 per share, suggesting a year-over-year improvement of more than 10%.
Och-Ziff Capital is one of the few banks that maintained its dividend payment throughout the financial crisis. The company has announced dividend hikes twice this year, with the latest boost in August 2012 of 40%.
Currently, the company pays a quarterly dividend of 14 cents per Class A share, affirming a yield of 5.5%.
Valuation Looks Reasonable
Shares of Och-Ziff Capital currently trade at 9.0x 12-month forward earnings, a 24% discount to the peer group average of 11.8x. Its price to book ratio of 1.6 is at a 14% premium to the industry median of 1.4. The company has a trailing 12-month ROE of 20.0%, compared with the peer group average of 13.8%.
Chart Shows Strength
Och-Ziff Capital has witnessed strong price momentum since the second quarter earnings release. Moreover, the company has been continuously outperforming its 50-day moving averages and the S&P 500 since the beginning of August 2012. The year-to-date return for the stock is 25.8%, compared with the S&P 500s return of 16.2%.
Och-Ziff Capital is a New York-based investment management company that invests in equity markets worldwide. The company was founded in 1994 and conducts business in New York with additional offices in London, Hong Kong, Tokyo, Bangalore and Beijing. It has a market cap of about $1.4 billion and assets under management of about $31.0 billion as of October 1, 2012. Och-Ziff Capital competes with Virtus Investment Partners, Inc. (VRTS), among others.
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