Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at or call 800-767-3771 ext.  9339.

Federated Investors Inc. (FII - Analyst Report) reported third-quarter 2013 earnings per share of 38 cents, inching past the Zacks Consensus Estimate by a penny. However, this compares unfavorably with the prior-year quarter earnings of 43 cents.

Improved assets under management (AUM) and a strong capital position were the positives for the quarter. However, decline in the top line and elevated level of operating expenses remains concerns.

Including certain non-recurring items, net income for the quarter under review came in at $37.7 million or 36 cents per share compared with $55.8 million or 54 cents per share in the prior-year quarter.

Performance in Detail

Total revenue decreased 11% year over year to $211.9 million. The reported revenues were also below the Zacks Consensus Estimate of $223.0 million. The decline was due to an upsurge in voluntary fee waivers, partially offset by enhanced average equity assets. Moreover, net investment advisory fees recorded a fall of 16% year over year and stood at $134.6 million.

During the reported quarter, Federated derived 36% of its revenues from money market assets, 62% from fluctuating assets (39% from equity assets and 23% from fixed-income assets) and the remaining 2% from other products and services.

Total operating expenses surged 4% on a year-over-year basis to $154.1 million in the quarter. The rise in expenses primarily reflects increased professional services fees, partially mitigated by lower distribution costs.

Assets Position

As of Sep 30, 2013, total AUM was $366.7 billion, up 1% from $364.1 billion as of Sep 30, 2012. Average managed assets were $364.2 billion, up 1% from $361.1 billion in the prior-year quarter.

At quarter end, fixed-income assets declined 3% year over year to record $50 billion. Equity assets came in at $40.3 billion, up 14% year over year.

Money market mutual fund assets came in at $237.9 billion, down 3% year over year. Money market assets in both funds and separate accounts were $270.3 billion, slightly up on a year-over-year basis.

As of Sep 30, 2013, cash and other investments were $350.5 million, up from $258.6 million as of Dec 31, 2012. Total long-term debt was $366.5 million, down from $405.0 million as of Dec 31, 2012.

Capital Deployment Update

In third-quarter 2013, Federated repurchased 60,100 shares of Federated class B common stock for $1.7 million.

Concurrent with the earnings release, the board of Federated declared a quarterly dividend of 25 cents per share. The dividend will be paid on Nov 15, 2013 to shareholders of record as of Nov 8, 2013.

Competitive Landscape

Among other investment managers, Janus Capital Group Inc.’s (JNS - Analyst Report) third-quarter 2013 earnings were in line with the Zacks Consensus Estimate, while results at T. Rowe Price Group, Inc. (TROW - Analyst Report) and Lazard Ltd. (LAZ - Analyst Report) beat the Zacks Consensus Estimate.

Our Viewpoint

We believe Federated has the potential for significant growth in the long run, given its fairly liquid balance sheet and a diversified asset as well as product mix. Moreover, investors’ increased demand for the company’s wide range of income-oriented products will aid top-line improvement. Further, capital deployment activities will augur well.

However, persistent regulatory pressures, slow global economic growth and a low-interest rate environment are expected to keep Federated’s earnings under pressure in the upcoming quarters. Shares of Federated currently carry a Zacks Rank #3 (Hold).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%