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Investment Managers Earnings to Watch Ahead: LM, SEIC & More
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Investment management industry (part of the broader Finance sector) performed decently over the past several quarters. However, regulatory issues and macro uncertainties have created a tough backdrop for the traditional asset managers. Notably, the Apr-Jun 2016 quarter witnessed elevated volatility which was mostly fueled by the Brexit vote.
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 quarter, both on a year-over-year basis.
Given such a backdrop, we expect overall industry flows to exhibit subdued growth, with flows into fixed income products increasing, and equity flows trending downwards.
Per our latest Earnings Preview article, overall earnings for the Finance sector in Apr-Jun quarter are expected to be down 0.4% year over year. Also, revenues are expected to decline 0.5%. Notably, during the previous quarter, the sector reflected a 6.9% decline in earnings while revenues improved 3.3%.
As investors and market watchers are eager to see how companies will perform in comparison with the market expectations, our model offers some insights into it.
Per our quantitative model, in order to be confident of an earnings surprise, a stock needs to have the right combination of the two key criteria – a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their upcoming earnings announcement. It shows the percentage of difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
With several companies set to release results, let’s have a look at what’s in store for the following investment management firms, releasing results on Jul 27:
Legg Mason Inc. : Estimates have been going down prior to the release of the company’s fiscal-first quarter 2017 (ending Jun 30) results. Notably, the Zacks Consensus Estimate of 73 cents for the company reflects a year-over-year decline of 36.26%.
Notably, the company has a Zacks Rank #3 with an Earnings ESP of -13.70%, making it difficult to conclusively predict an earnings beat this quarter. Though Zacks Rank #3 increases the predictive power of our model, we also need a positive Earnings ESP to be sure of an earnings beat.
Regarding earnings surprise history, despite recording positive earnings surprise in two out of the four trailing quarters, the average earnings surprise was a negative 44.57%.
SEI Investments Co. (SEIC - Free Report) : Estimates have been stable lately prior to the company’s second-quarter 2016 earnings release. The Zacks Consensus Estimate of 50 cents reflects a year-over-year decline of 2.45%.
Also, it is not likely to beat expectations as the company has a Zacks Rank #3 with an Earnings ESP of 0.00%.
Notably, the company reported average negative surprise of 0.82% in the trailing four quarters.
Evercore Partners Inc. (EVR - Free Report) : The Zacks Consensus Estimate of 76 cents for the company reflects year-over-year growth of 16.92%. However, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, lowering the chances of an earnings beat. Notably, estimates remained unchanged over the last 30 days.
The company delivered average positive earnings surprise of 6.90% in the trailing four quarters.
Manning & Napier, Inc. : Estimates have been going down lately ahead of the release of the company’s second-quarter 2016 results. The Zacks Consensus Estimate of 18 cents reflects a year-over-year decline of 25.0%.
Also, the company holds a Zacks Rank #4 (Sell), with an Earnings ESP of 0.00%. Hence, the probability of an earnings beat by the company is quite low. 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.
Notably, Manning & Napier delivered negative earnings surprises in three of the trailing four quarters with an average negative surprise of 6.14%.
The Carlyle Group LP (CG - Free Report) : The Zacks Consensus Estimate of 25 cents for the company reflects a year-over-year decline of nearly 55%. Notably, the estimates have been going down ahead of the company’s second-quarter 2016 results.
The company is not likely to beat expectations as it has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 0.00%.
Notably, the company reported negative earnings surprise in two of the trailing four quarters with an average negative surprise of 1.83%.
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Investment Managers Earnings to Watch Ahead: LM, SEIC & More
Investment management industry (part of the broader Finance sector) performed decently over the past several quarters. However, regulatory issues and macro uncertainties have created a tough backdrop for the traditional asset managers. Notably, the Apr-Jun 2016 quarter witnessed elevated volatility which was mostly fueled by the Brexit vote.
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 quarter, both on a year-over-year basis.
Given such a backdrop, we expect overall industry flows to exhibit subdued growth, with flows into fixed income products increasing, and equity flows trending downwards.
Per our latest Earnings Preview article, overall earnings for the Finance sector in Apr-Jun quarter are expected to be down 0.4% year over year. Also, revenues are expected to decline 0.5%. Notably, during the previous quarter, the sector reflected a 6.9% decline in earnings while revenues improved 3.3%.
As investors and market watchers are eager to see how companies will perform in comparison with the market expectations, our model offers some insights into it.
Per our quantitative model, in order to be confident of an earnings surprise, a stock needs to have the right combination of the two key criteria – a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their upcoming earnings announcement. It shows the percentage of difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
With several companies set to release results, let’s have a look at what’s in store for the following investment management firms, releasing results on Jul 27:
Legg Mason Inc. : Estimates have been going down prior to the release of the company’s fiscal-first quarter 2017 (ending Jun 30) results. Notably, the Zacks Consensus Estimate of 73 cents for the company reflects a year-over-year decline of 36.26%.
Notably, the company has a Zacks Rank #3 with an Earnings ESP of -13.70%, making it difficult to conclusively predict an earnings beat this quarter. Though Zacks Rank #3 increases the predictive power of our model, we also need a positive Earnings ESP to be sure of an earnings beat.
Regarding earnings surprise history, despite recording positive earnings surprise in two out of the four trailing quarters, the average earnings surprise was a negative 44.57%.
LEGG MASON INC Price and EPS Surprise
LEGG MASON INC Price and EPS Surprise | LEGG MASON INC Quote
SEI Investments Co. (SEIC - Free Report) : Estimates have been stable lately prior to the company’s second-quarter 2016 earnings release. The Zacks Consensus Estimate of 50 cents reflects a year-over-year decline of 2.45%.
Also, it is not likely to beat expectations as the company has a Zacks Rank #3 with an Earnings ESP of 0.00%.
Notably, the company reported average negative surprise of 0.82% in the trailing four quarters.
SEI INVESTMENTS Price and EPS Surprise
SEI INVESTMENTS Price and EPS Surprise | SEI INVESTMENTS Quote
Evercore Partners Inc. (EVR - Free Report) : The Zacks Consensus Estimate of 76 cents for the company reflects year-over-year growth of 16.92%. However, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, lowering the chances of an earnings beat. Notably, estimates remained unchanged over the last 30 days.
The company delivered average positive earnings surprise of 6.90% in the trailing four quarters.
EVERCORE PARTNR Price and EPS Surprise
EVERCORE PARTNR Price and EPS Surprise | EVERCORE PARTNR Quote
Manning & Napier, Inc. : Estimates have been going down lately ahead of the release of the company’s second-quarter 2016 results. The Zacks Consensus Estimate of 18 cents reflects a year-over-year decline of 25.0%.
Also, the company holds a Zacks Rank #4 (Sell), with an Earnings ESP of 0.00%. Hence, the probability of an earnings beat by the company is quite low. 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.
Notably, Manning & Napier delivered negative earnings surprises in three of the trailing four quarters with an average negative surprise of 6.14%.
MANNING&NAPIER Price and EPS Surprise
MANNING&NAPIER Price and EPS Surprise | MANNING&NAPIER Quote
The Carlyle Group LP (CG - Free Report) : The Zacks Consensus Estimate of 25 cents for the company reflects a year-over-year decline of nearly 55%. Notably, the estimates have been going down ahead of the company’s second-quarter 2016 results.
The company is not likely to beat expectations as it has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 0.00%.
Notably, the company reported negative earnings surprise in two of the trailing four quarters with an average negative surprise of 1.83%.
CARLYLE GROUP Price and EPS Surprise
CARLYLE GROUP Price and EPS Surprise | CARLYLE GROUP Quote
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