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Investment Managers Earnings on Jul 26: AMP, JNS, TROW, WDR
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The major part of second quarter was plagued by uncertainty related to the U.S. monetary policy, global economic growth and the movement of global equity markets. Investment management (part of the broader Finance sector) performed decently over the past several quarters. Volatility in the second quarter was heightened amid Brexit concerns, which became more evident in June. Though the factors leading to volatility differed from the first quarter, it yielded quite similar results.
Equity markets revealed mixed results during the quarter. In the U.S. markets, the S&P 500 was up 1.7% , while in international equity markets, MSCI EAFE index was down 1.5% at the end of second quarter, both on a year-over-year basis .
Prior to Brexit, the U.S. markets were rallying but about 5% of all stocks were sold off in the next two trading days post the vote. However, the stocks recovered in the last three days of the quarter.
During the quarter, fixed income generated positive returns as investors ran for safe haven assets due to the prevailing global growth concerns and the uncertainty caused by Brexit and Fed rate hike. Consequently, fixed income prices increased and resulted in reduced yields. Notably, following the end of second quarter, the 10-Year Treasury yields came in at new all-time low of 1.37%. As a result, assets under management (AUM) for many investment managers are expected to escalate.
Also, investment managers are expected to be impacted by the strengthening of the U.S. dollar on AUM mix, considering their global footprints.
Some investment managers, including BlackRock, Inc. (BLK - Free Report) and The Blackstone Group L.P. (BX - Free Report) have released their results, wherein the companies have posted growth in AUM.
Notably, per our Earnings Preview report, nine of the 16 Zacks sectors are likely to register negative earnings growth in second quarter, including Finance and Technology – the two biggest sectors in the index.
Let’s take a look at the four major investment management stocks that are scheduled to release their results on Jul 26.
Ameriprise Financial, Inc. (AMP - Free Report) is unlikely to beat the Zacks Consensus Estimate as the equity market volatility that triggered notable outflows in the Asset Management segment in the previous two quarters is anticipated to get exhibited in the upcoming announcement too. Moreover, costs associated with advertising and technology upgrades are expected to raise expenses for the company. Nonetheless, the Advice & Wealth Management segment is predicted to record strong growth, driven by improved advisor productivity. Ameriprise is slated to release results after the closing bell tomorrow (read more: Ameriprise Q2 Earnings: Will the Stock Disappoint?).
Notably, Ameriprise has surpassed the Zacks Consensus Estimates in three of the trailing four quarters, as shown in the chart below:
T. Rowe Price Group, Inc. (TROW - Free Report) is slated to announce results before the opening bell on Jul 26. The company has a Zacks Rank #3 (Hold) with an Earnings ESP of -0.89%, making it difficult to conclusively predict an earnings beat this quarter. During the quarter, global concerns dominated the investors’ sentiments, which in all probability will impact T. Rowe Price as well. The company’s bottom line is plagued with challenges like rising operating expenses. Though the company did not point out anything related to its cost-control initiatives during the quarter, total advertising and promotion costs for 2016 are anticipated to flat with the 2015 level.
However, T. Rowe Price’s efforts to improve operating efficiency resulted in year-over-year growth in the top line over the past few years. Though revenues decerased in the last quarter, we believe that the company is well positioned to maintain the uptrend going forward on the back of strong inflow and growing fixed income (read more: T. Rowe Price Q2 Earnings: What's in Store?).
T. Rowe Price has a positive average beat of 3.64% for the trailing four quarters, having surpassed the Zacks Consensus Estimate in three quarters as demonstrated in the chart below:
Janus Capital Group, Inc. is set to announce its results before the market opens on Jul 26. The Zacks Consensus Estimate of 22 cents for the company for the upcoming release displays a year-over-year decline of about 5.22%. Janus Capital’s activities during the quarter were inadequate to win the analysts’ confidence, as its evident from three negative revisions in earnings estimates (as against no positive revision) over the last 30 days. Notably, the Zacks Consensus Estimate fell 4.3% over the same time frame.
Moreover, our proven quantitative model also does not conclusively predict an earnings beat. The company has a Zacks Rank #3 with an Earnings ESP of 0.00%.
Janus Capital recorded negative earnings surprises in three of the trailing four quarters, with an average negative surprise of 3.47%, as shown in the chart below:
Waddell & Reed Financial, Inc. is scheduled to announce its results before the market opens tomorrow. The Zacks Consensus Estimate of 48 cents for the company for the upcoming release exhibits the year-over-year decline of about 40.0%. Waddell & Reed’s activities during the quarter were insufficient to win the analysts’ confidence, as evident from one negative revision in earnings estimates (as against no positive revision) over the last 30 days. Notably, the Zacks Consensus Estimate remained stable over the same time frame.
Moreover, our proven quantitative model does not conclusively predict earnings beat this quarter. The company has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 6.25%. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
With respect to the surprise trend, Waddell & Reed posted positive surprises in two of the last four quarters, with an average beat of 1.77%, as shown in the chart below:
With tough economic environment and volatile markets, irrespective of an earnings beat or miss, investors should focus on the companies’ fundamentals and check our full write-up on earnings releases of these stocks later.
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Investment Managers Earnings on Jul 26: AMP, JNS, TROW, WDR
The major part of second quarter was plagued by uncertainty related to the U.S. monetary policy, global economic growth and the movement of global equity markets. Investment management (part of the broader Finance sector) performed decently over the past several quarters. Volatility in the second quarter was heightened amid Brexit concerns, which became more evident in June. Though the factors leading to volatility differed from the first quarter, it yielded quite similar results.
Equity markets revealed mixed results during the quarter. In the U.S. markets, the S&P 500 was up 1.7% , while in international equity markets, MSCI EAFE index was down 1.5% at the end of second quarter, both on a year-over-year basis .
Prior to Brexit, the U.S. markets were rallying but about 5% of all stocks were sold off in the next two trading days post the vote. However, the stocks recovered in the last three days of the quarter.
During the quarter, fixed income generated positive returns as investors ran for safe haven assets due to the prevailing global growth concerns and the uncertainty caused by Brexit and Fed rate hike. Consequently, fixed income prices increased and resulted in reduced yields. Notably, following the end of second quarter, the 10-Year Treasury yields came in at new all-time low of 1.37%. As a result, assets under management (AUM) for many investment managers are expected to escalate.
Also, investment managers are expected to be impacted by the strengthening of the U.S. dollar on AUM mix, considering their global footprints.
Some investment managers, including BlackRock, Inc. (BLK - Free Report) and The Blackstone Group L.P. (BX - Free Report) have released their results, wherein the companies have posted growth in AUM.
Notably, per our Earnings Preview report, nine of the 16 Zacks sectors are likely to register negative earnings growth in second quarter, including Finance and Technology – the two biggest sectors in the index.
Let’s take a look at the four major investment management stocks that are scheduled to release their results on Jul 26.
Ameriprise Financial, Inc. (AMP - Free Report) is unlikely to beat the Zacks Consensus Estimate as the equity market volatility that triggered notable outflows in the Asset Management segment in the previous two quarters is anticipated to get exhibited in the upcoming announcement too. Moreover, costs associated with advertising and technology upgrades are expected to raise expenses for the company. Nonetheless, the Advice & Wealth Management segment is predicted to record strong growth, driven by improved advisor productivity. Ameriprise is slated to release results after the closing bell tomorrow (read more: Ameriprise Q2 Earnings: Will the Stock Disappoint?).
Notably, Ameriprise has surpassed the Zacks Consensus Estimates in three of the trailing four quarters, as shown in the chart below:
AMERIPRISE FINL Price and EPS Surprise
AMERIPRISE FINL Price and EPS Surprise | AMERIPRISE FINL Quote
T. Rowe Price Group, Inc. (TROW - Free Report) is slated to announce results before the opening bell on Jul 26. The company has a Zacks Rank #3 (Hold) with an Earnings ESP of -0.89%, making it difficult to conclusively predict an earnings beat this quarter. During the quarter, global concerns dominated the investors’ sentiments, which in all probability will impact T. Rowe Price as well. The company’s bottom line is plagued with challenges like rising operating expenses. Though the company did not point out anything related to its cost-control initiatives during the quarter, total advertising and promotion costs for 2016 are anticipated to flat with the 2015 level.
However, T. Rowe Price’s efforts to improve operating efficiency resulted in year-over-year growth in the top line over the past few years. Though revenues decerased in the last quarter, we believe that the company is well positioned to maintain the uptrend going forward on the back of strong inflow and growing fixed income (read more: T. Rowe Price Q2 Earnings: What's in Store?).
T. Rowe Price has a positive average beat of 3.64% for the trailing four quarters, having surpassed the Zacks Consensus Estimate in three quarters as demonstrated in the chart below:
T ROWE PRICE Price and EPS Surprise
T ROWE PRICE Price and EPS Surprise | T ROWE PRICE Quote
Janus Capital Group, Inc. is set to announce its results before the market opens on Jul 26. The Zacks Consensus Estimate of 22 cents for the company for the upcoming release displays a year-over-year decline of about 5.22%. Janus Capital’s activities during the quarter were inadequate to win the analysts’ confidence, as its evident from three negative revisions in earnings estimates (as against no positive revision) over the last 30 days. Notably, the Zacks Consensus Estimate fell 4.3% over the same time frame.
Moreover, our proven quantitative model also does not conclusively predict an earnings beat. The company has a Zacks Rank #3 with an Earnings ESP of 0.00%.
Janus Capital recorded negative earnings surprises in three of the trailing four quarters, with an average negative surprise of 3.47%, as shown in the chart below:
JANUS CAP GRP Price and EPS Surprise
JANUS CAP GRP Price and EPS Surprise | JANUS CAP GRP Quote
Waddell & Reed Financial, Inc. is scheduled to announce its results before the market opens tomorrow. The Zacks Consensus Estimate of 48 cents for the company for the upcoming release exhibits the year-over-year decline of about 40.0%. Waddell & Reed’s activities during the quarter were insufficient to win the analysts’ confidence, as evident from one negative revision in earnings estimates (as against no positive revision) over the last 30 days. Notably, the Zacks Consensus Estimate remained stable over the same time frame.
Moreover, our proven quantitative model does not conclusively predict earnings beat this quarter. The company has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 6.25%. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
With respect to the surprise trend, Waddell & Reed posted positive surprises in two of the last four quarters, with an average beat of 1.77%, as shown in the chart below:
WADDELL&REED -A Price and EPS Surprise
WADDELL&REED -A Price and EPS Surprise | WADDELL&REED -A Quote
With tough economic environment and volatile markets, irrespective of an earnings beat or miss, investors should focus on the companies’ fundamentals and check our full write-up on earnings releases of these stocks later.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>