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Invesco (IVZ) Q2 Earnings: What to Expect from the Stock?
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Invesco Ltd. (IVZ - Free Report) is slated to release second-quarter 2016 results on Thursday, Jul 28, before the market opens.
Last quarter, Invesco’s adjusted earnings lagged the Zacks Consensus Estimate due to pressure on revenues, partly offset by stable expenses. The earnings miss translated into downward share price movement. For the three months ended Jun 30, 2016, Invesco stock was down nearly 20%.
Further, analysts don’t seem to be happy with Invesco performance in the just concluded quarter. The company witnessed six downward revisions in earnings estimates (versus one upward revision) over the last 30 days. Notably, the Zacks Consensus Estimate of 55 cents remained stable over the last seven days.
Further, the company reported an average negative earnings surprise of 3.55% over the trailing four quarters.
Our quantitative model also does not predict the earnings beat for Invesco this time. Here is what it indicates:
Chances of Invesco beating the Zacks Consensus Estimate in the second quarter are quite low. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen.
Zacks ESP: The Earnings ESP for Invesco is 0.00%. This is because the Most Accurate estimate stands on par with the Zacks Consensus Estimate.
Zacks Rank: Invesco has a Zacks Rank #5 (Strong Sell). As it is we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement.
Also, the company’s earnings estimate for the upcoming release indicates a year-over-year decline of about 12.93%.
Factors Impacting Q2 Results
Will Invesco report dismal earnings again? Or will the company be able to overcome the tough operating backdrop? Let’s see how things have shaped up for this announcement.
Despite initiating a business transformation program, Invesco should witness a rise in operating expenses, given the continuous investment in franchise. Further, incremental implementation costs associated with its business transformation program are anticipated to be nearly $85 million in 2016. So, a certain portion of this expense should be recorded in the upcoming release.
On the revenue front, the strengthening dollar should exert pressure on Invesco’s assets under management mix and management fees.
However, per Invesco’s latest preliminary month-end assets under management (AUM) report, as of Jun 30, 2016, total AUM inched up 1% sequentially, depicting improved Fixed Income, Money Market and Alternatives AUMs. This was largely offset by pressure on Equity AUM.
Therefore, overall top-line growth should remain muted during the quarter.
Stocks to Consider
Here are a few finance stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #3. It is scheduled to report on Jul 27.
LPL Financial Holdings Inc. (LPLA - Free Report) , which is expected to report on Jul 28, has an Earnings ESP of +2.33% and a Zacks Rank #3.
Federated Investors, Inc. has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is slated to release results on Jul 28.
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Invesco (IVZ) Q2 Earnings: What to Expect from the Stock?
Invesco Ltd. (IVZ - Free Report) is slated to release second-quarter 2016 results on Thursday, Jul 28, before the market opens.
Last quarter, Invesco’s adjusted earnings lagged the Zacks Consensus Estimate due to pressure on revenues, partly offset by stable expenses. The earnings miss translated into downward share price movement. For the three months ended Jun 30, 2016, Invesco stock was down nearly 20%.
Further, analysts don’t seem to be happy with Invesco performance in the just concluded quarter. The company witnessed six downward revisions in earnings estimates (versus one upward revision) over the last 30 days. Notably, the Zacks Consensus Estimate of 55 cents remained stable over the last seven days.
Further, the company reported an average negative earnings surprise of 3.55% over the trailing four quarters.
INVESCO LTD Price and EPS Surprise
INVESCO LTD Price and EPS Surprise | INVESCO LTD Quote
Earnings Whispers
Our quantitative model also does not predict the earnings beat for Invesco this time. Here is what it indicates:
Chances of Invesco beating the Zacks Consensus Estimate in the second quarter are quite low. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen.
Zacks ESP: The Earnings ESP for Invesco is 0.00%. This is because the Most Accurate estimate stands on par with the Zacks Consensus Estimate.
Zacks Rank: Invesco has a Zacks Rank #5 (Strong Sell). As it is we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement.
Also, the company’s earnings estimate for the upcoming release indicates a year-over-year decline of about 12.93%.
Factors Impacting Q2 Results
Will Invesco report dismal earnings again? Or will the company be able to overcome the tough operating backdrop? Let’s see how things have shaped up for this announcement.
Despite initiating a business transformation program, Invesco should witness a rise in operating expenses, given the continuous investment in franchise. Further, incremental implementation costs associated with its business transformation program are anticipated to be nearly $85 million in 2016. So, a certain portion of this expense should be recorded in the upcoming release.
On the revenue front, the strengthening dollar should exert pressure on Invesco’s assets under management mix and management fees.
However, per Invesco’s latest preliminary month-end assets under management (AUM) report, as of Jun 30, 2016, total AUM inched up 1% sequentially, depicting improved Fixed Income, Money Market and Alternatives AUMs. This was largely offset by pressure on Equity AUM.
Therefore, overall top-line growth should remain muted during the quarter.
Stocks to Consider
Here are a few finance stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #3. It is scheduled to report on Jul 27.
LPL Financial Holdings Inc. (LPLA - Free Report) , which is expected to report on Jul 28, has an Earnings ESP of +2.33% and a Zacks Rank #3.
Federated Investors, Inc. has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is slated to release results on Jul 28.
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 >>