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Growth in Assets to Support Invesco's (IVZ) Q2 Earnings
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Invesco (IVZ - Free Report) is slated to announce second-quarter 2020 results on Jul 28, before market open. While its revenues are expected to have grown in the quarter, earnings are likely to have witnessed a decline from the prior-year quarter.
In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate. Results reflected higher assets under management (AUM) balance and a rise in revenues, driven by the OppenheimerFunds buyout. However, higher expenses and net outflows were offsetting factors.
Invesco does not have an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in only two of the trailing four quarters.
The company’s activities and business prospects in the to-be-reported quarter failed to encourage analysts to revise estimates upward. The Zacks Consensus Estimate for Invesco’s second-quarter earnings of 42 cents has been unchanged over the past seven days. Also, the figure indicates a decline of 35.4% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $1.49 billion, which suggests 3.4% growth year over year.
Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to have influenced Invesco’s second-quarter performance.
Key Factors to Note
Per the monthly metrics data published by Invesco, preliminary total AUM as of Jun 30, 2020, was $1,145.2 billion, up 8.7% from the Mar 31, 2020-level. Despite net outflows, the company recorded a sequential increase in AUM on favorable market returns.
Thus, driven by a rise in AUM balance, performance fee is expected to have been positively impacted. The Zacks Consensus Estimate for performance fees for the to-be-reported quarter is pegged at $11.10 million, indicating substantial growth from the previous quarter’s reported number.
However, despite growth in assets, investment management fees are likely to have been negatively impacted in the quarter. The consensus estimate for the same of $1.02 billion indicates a decline of 12.3% sequentially.
The consensus mark for service and distribution fees of $337 million indicates a 7.9% sequential decline.
On the cost front, while Invesco’s initiatives to manage costs have helped in improving efficiency, continued rise in compensation and marketing costs have led to an increase in overall expenses over the past few years. Given its inorganic growth strategy and investments in franchise, expenses are expected to have remained elevated in the second quarter as well.
Earnings Whispers
Per the Zacks model, the chances of Invesco beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco is +4.70%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Other Stocks That Warrant a Look
Here are some other finance stocks you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
UMB Financial Corporation (UMBF - Free Report) is scheduled to release quarterly results on Jul 28. The company currently has an Earnings ESP of +33.72% and a Zacks Rank of 3.
The Earnings ESP for Moody’s Corporation (MCO - Free Report) is +2.14% and it carries a Zacks Rank of 3 at present. The company is slated to report quarterly numbers on Jul 30.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Growth in Assets to Support Invesco's (IVZ) Q2 Earnings
Invesco (IVZ - Free Report) is slated to announce second-quarter 2020 results on Jul 28, before market open. While its revenues are expected to have grown in the quarter, earnings are likely to have witnessed a decline from the prior-year quarter.
In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate. Results reflected higher assets under management (AUM) balance and a rise in revenues, driven by the OppenheimerFunds buyout. However, higher expenses and net outflows were offsetting factors.
Invesco does not have an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in only two of the trailing four quarters.
Invesco Ltd. Price and EPS Surprise
Invesco Ltd. price-eps-surprise | Invesco Ltd. Quote
The company’s activities and business prospects in the to-be-reported quarter failed to encourage analysts to revise estimates upward. The Zacks Consensus Estimate for Invesco’s second-quarter earnings of 42 cents has been unchanged over the past seven days. Also, the figure indicates a decline of 35.4% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $1.49 billion, which suggests 3.4% growth year over year.
Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to have influenced Invesco’s second-quarter performance.
Key Factors to Note
Per the monthly metrics data published by Invesco, preliminary total AUM as of Jun 30, 2020, was $1,145.2 billion, up 8.7% from the Mar 31, 2020-level. Despite net outflows, the company recorded a sequential increase in AUM on favorable market returns.
Thus, driven by a rise in AUM balance, performance fee is expected to have been positively impacted. The Zacks Consensus Estimate for performance fees for the to-be-reported quarter is pegged at $11.10 million, indicating substantial growth from the previous quarter’s reported number.
However, despite growth in assets, investment management fees are likely to have been negatively impacted in the quarter. The consensus estimate for the same of $1.02 billion indicates a decline of 12.3% sequentially.
The consensus mark for service and distribution fees of $337 million indicates a 7.9% sequential decline.
On the cost front, while Invesco’s initiatives to manage costs have helped in improving efficiency, continued rise in compensation and marketing costs have led to an increase in overall expenses over the past few years. Given its inorganic growth strategy and investments in franchise, expenses are expected to have remained elevated in the second quarter as well.
Earnings Whispers
Per the Zacks model, the chances of Invesco beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco is +4.70%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Other Stocks That Warrant a Look
Here are some other finance stocks you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
UMB Financial Corporation (UMBF - Free Report) is scheduled to release quarterly results on Jul 28. The company currently has an Earnings ESP of +33.72% and a Zacks Rank of 3.
Hercules Capital, Inc. (HTGC - Free Report) is scheduled to release quarterly results on Jul 30. The company has an Earnings ESP of +3.66% and currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for Moody’s Corporation (MCO - Free Report) is +2.14% and it carries a Zacks Rank of 3 at present. The company is slated to report quarterly numbers on Jul 30.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>