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Invesco (IVZ) Misses on Q2 Earnings as Revenues & AUM Fall

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Invesco (IVZ - Free Report) reported second-quarter 2020 adjusted earnings of 35 cents per share, missing the Zacks Consensus Estimate of 42 cents. Also, the bottom line declined 46.2% from the prior-year quarter.

Increase in operating expenses, lower revenues and net outflows were the major undermining factors amid coronavirus scare. Yet, a strong liquidity position was a tailwind.

On a GAAP basis, net income attributable to common shareholders came in at $40.5 million or 9 cents per share compared with $40.1 million or 9 cents per share a year ago.

Revenues Down, Expenses Rise

GAAP operating revenues were $1.42 billion, which decreased 1.4% year over year. Also, the figure missed the Zacks Consensus Estimate of $1.49 billion.

Adjusted net revenues declined 9.7% from the prior-year quarter to $1.03 billion. The fall was mainly due to significant market volatility.

Adjusted operating expenses were $674.6 million, up nearly 1% from the prior-year quarter.

Adjusted operating margin was 34.8%, down from 35.2% a year ago.

As of Jun 30, 2020, cash and cash equivalents were $987.1 million, up 5% sequentially. Further, long-term debt amounted to $2.41 billion, including the credit facility balance of $325.6 million.

AUM Balance Declines

As of Jun 30, 2020, AUM was $1.15 billion, which decreased 4.4% year over year. Average AUM at second quarter-end totaled $1.12 billion, up 5.9% from the year-ago period.

The company witnessed long-term net outflows of $14.2 billion.

Share Repurchase Update

During the second quarter, Invesco didn’t repurchase any shares.

Our View

Invesco remains well poised to benefit from its global footprint, product offerings and the OppenheimerFunds buyout. However, mounting expenses and outflows are likely to hurt the company’s financials.

Invesco Ltd. Price, Consensus and EPS Surprise

Currently, Invesco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

SEI Investments Co.’s (SEIC - Free Report) second-quarter 2020 earnings of 68 cents per share lagged the Zacks Consensus Estimate of 69 cents. Moreover, the figure reflects a decline of 17.1% from the prior-year quarter.

BlackRock, Inc.’s (BLK - Free Report) second-quarter 2020 adjusted earnings of $7.85 per share comfortably surpassed the Zacks Consensus Estimate of $6.90. The figure reflects a rise of 22.5% from the year-ago number.

Cohen & Steers’ (CNS - Free Report) second-quarter 2020 adjusted earnings of 54 cents per share missed the Zacks Consensus Estimate of 55 cents. Moreover, the bottom line was 12.9% lower than the year-ago reported figure.

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