Earnings momentum for Virtus Investment Partners, Inc. (VRTS - Snapshot Report) has been advancing since this asset management company posted impressive third quarter results in late October, which included an earnings surprise of 16.0%. With a solid year-to-date return of 48.6%, this Zacks #1 Rank (Strong Buy) stock hit a new 52-week high on December 3.
Robust Q3 Results
On October 31, Virtus Investment Partners reported third quarter earnings per share of $1.43, topping the Zacks Consensus Estimate by 16.3% and significantly outpacing the year-ago loss of 56 cents. The improved top line was partially offset by higher operating expenses.
On an adjusted basis, total revenue surged 29% year over year to $54.1 million. Operating expenses were up 11% to $32.3 million. Moreover, operating income soared 70% to $21.8 million.
As of September 30, 2012, assets under management (AUM) were up 26% from the year-ago quarter to $41.8 billion, due to continued strong sales, positive net flows from long-term mutual funds and market appreciation.
Earnings Momentum Rises
The Zacks Consensus Estimate for 2012 has gained 9.0% to $4.60 per share over the past 60 days, as 2 out of 3 estimates were revised higher. This implies year-over-year growth of 300.9%. The Zacks Consensus Estimate for 2013 climbed 9.2% to $6.06 in the same time, again on 2 upward revisions out of 3 estimates. This implies year-over-year growth of 31.8%.
Virtus Investment Partners currently trades at 24.9x 12-month forward earnings, an 83% premium to the peer group average of 13.6x. Its price-to-book ratio of 3.8 is 73% above the peer group average of 2.2.
Virtus Investment Partners has witnessed strong price momentum since its third quarter earnings release. Moreover, the company has been almost continuously outperforming the S&P 500, along with its 200-day moving average, over the last three months. The year-to-date return for the stock is 48.6%, compared with the S&P 500s return of 12.4%.
Headquartered in Hartford, Connecticut, Virtus Investment Partners provides investment management products and services to individuals and institutions. The company started operations in November 1995 through a reverse merger with Duff & Phelps Corporation (DUF). The company has a market capital of about $897.3 million. AllianceBernstein Holding L.P. (AB) is another Zacks #1 Rank (Strong Buy) in the same industry.
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