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Financial Engines

FNGN

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Financial Engines, Inc. (FNGN - Snapshot Report) has delivered two straight quarters with positive earnings surprises, putting together an average beat of 19.6%. This Zacks Rank #1 (Strong Buy) investment advisor offers an attractive opportunity for investors given its expected earnings growth of 38.3% in 2013 and projected long-term earnings growth of 32.5%.

Rank Drivers

Financial Engines will report fourth-quarter results on February 18. The Zacks Consensus Estimate for the quarter is 13 cents on revenues of $52 million. In the year-ago quarter, it reported 12 cents.

On November 6, Financial Engines reported third quarter net income of 10 cents per share, nearly 25% above the Zacks Consensus Estimate and 43% higher than the year-ago earnings.

Revenue jumped 36% year over year to $48.4 million, driven by a 50% surge in professional management revenue.

The company expects to generate 2012 revenues between $185 million and $187 million. The Zacks Consensus Estimate of $186 million is at the midpoint of the company guidance.

Earnings Estimates

The Zacks Consensus Estimate for 2013 is currently pegged at 51 cents, suggesting a year-over-year increase of 38.3%.

Valuation

Shares of Financial Engines are roughly trading at 55.9x on a price-to-earnings basis (P/E), compared with the peer group average of 19.9x. On a price-to-book (P/B) basis, shares are trading at 5.3x, compared with the peer group average of 1.6x.

Financial Engines has a trailing 12-month ROE of 7.6%, lower than the peer group average of 11.1%.

Headquartered in Palo Alto, California, and founded in 1996, Financial Engines Inc. is a leading investment advisor. It provides portfolio management, investment advice and retirement income services to participants in employer-sponsored defined contribution retirement plans, such as 401(k) plans. Its target retirement plan market includes plan participants, plan sponsors and plan providers. Having a market capitalization of $1.35 billion, it competes with Ameriprise Financial Inc. (AMP) among others.


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