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Janus Capital (JNS) Stock Up Despite Earnings Miss in Q2
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Janus Capital Group, Inc. recorded a negative earnings surprise of 4.55% in second-quarter 2016. The company reported earnings per share attributable to common shareholders of 21 cents, missing the Zacks Consensus Estimate by a penny. Moreover, results fell below the prior-year quarter figure of 23 cents.
Though the company missed the earnings estimate, investors have taken the results as a positive on upward movement in assets under management (AUM). Therefore, shares spiked around 1% following the second quarter results.
Lower-than-expected results reflect the reduction in revenues. However, the decline in operating expenses is a consequence of prudent expense management. Moreover, increase in AUM was another optimistic point.
Total revenue decreased 7.4% year over year to $251.9 million in the quarter, primarily on the back of lower investment management and higher negative performance fees. Revenues also missed the Zacks Consensus Estimate of $254 million.
Total operating expenses decreased 3.1% on a year-over-year basis to $184 million in the quarter. The decrease was a result of a fall in almost all categories of expenses, partially offset by a rise in depreciation and amortization, marketing and advertising along with general, administrative and occupancy expenses.
Strong Asset Position
Average AUM decreased to $189.3 billion from $193 billion in the year-ago quarter and from $180.2 billion in the preceding quarter.
As of Jun 30, 2016, Janus Capital reported total AUM of $194.7 billion, up from $191.3 billion as of Mar 31, 2016 and $189.5 billion as of Jun 30, 2015.
Notably, the reported quarter witnessed a sequential increase in complex-wide assets, exhibiting net market appreciation of $3.1 billion and exchange-traded product net inflows of $0.3 billion. Fundamental equity and fixed income long-term net inflows summed $0.3 billion and $0.4 billion, respectively, mitigated by Mathematical equity long-term net outflows of $0.7 billion.
Stable Balance Sheet
As of Jun 30, 2016, Janus Capital had stockholders’ equity of $1.7 billion, cash and investments of $653.6 million and outstanding debt of $404.2 million compared with stockholders’ equity of $1.7 billion, cash and investments of $608.4 million and outstanding debt of $403.3 million at the end of the prior quarter.
Cash flow from operations in the reported quarter was negative $104.3 million compared with $87.3 million in the second-quarter 2015.
Capital Deployment Activity
During the second quarter, Janus Capital repurchased over 1.66 million shares of its common stock at an average price of $14.59 per share and a total cost of $24.2 million.
Our Viewpoint
Janus Capital has the best-in-class investment boutique with potential for strong AUM and revenue improvement along with competitive leverage growth. Capital deployment activities of the company are also laudable. Moreover, the recent stake acquisition in Kapstream enhances Janus Capital’s fixed income assets.
Given its healthy balance sheet, we predict Janus Capital to perform well over the long haul while its equity-heavy portfolio makes it vulnerable to the equity market. Further, lower revenues are a key concern.
Janus Capital currently carries a Zacks Rank #3 (Hold).
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) reported second-quarter 2016 net income of 76 cents per share missing the Zacks Consensus Estimate of $1.13. Moreover, the reported figure decreased from the year-ago earnings of $1.24.
Notably, results included non-recurring operating charge associated with the compensation to certain clients in relation to the Dell appraisal rights matter which resulted in reduced net income by 39 cents per share.
Among others, Invesco Ltd. (IVZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to release June quarter-end results on Jul 28.
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Janus Capital (JNS) Stock Up Despite Earnings Miss in Q2
Janus Capital Group, Inc. recorded a negative earnings surprise of 4.55% in second-quarter 2016. The company reported earnings per share attributable to common shareholders of 21 cents, missing the Zacks Consensus Estimate by a penny. Moreover, results fell below the prior-year quarter figure of 23 cents.
Though the company missed the earnings estimate, investors have taken the results as a positive on upward movement in assets under management (AUM). Therefore, shares spiked around 1% following the second quarter results.
Lower-than-expected results reflect the reduction in revenues. However, the decline in operating expenses is a consequence of prudent expense management. Moreover, increase in AUM was another optimistic point.
Revenue Falls; Effective Cost Control Reflected
Total revenue decreased 7.4% year over year to $251.9 million in the quarter, primarily on the back of lower investment management and higher negative performance fees. Revenues also missed the Zacks Consensus Estimate of $254 million.
Total operating expenses decreased 3.1% on a year-over-year basis to $184 million in the quarter. The decrease was a result of a fall in almost all categories of expenses, partially offset by a rise in depreciation and amortization, marketing and advertising along with general, administrative and occupancy expenses.
Strong Asset Position
Average AUM decreased to $189.3 billion from $193 billion in the year-ago quarter and from $180.2 billion in the preceding quarter.
As of Jun 30, 2016, Janus Capital reported total AUM of $194.7 billion, up from $191.3 billion as of Mar 31, 2016 and $189.5 billion as of Jun 30, 2015.
Notably, the reported quarter witnessed a sequential increase in complex-wide assets, exhibiting net market appreciation of $3.1 billion and exchange-traded product net inflows of $0.3 billion. Fundamental equity and fixed income long-term net inflows summed $0.3 billion and $0.4 billion, respectively, mitigated by Mathematical equity long-term net outflows of $0.7 billion.
Stable Balance Sheet
As of Jun 30, 2016, Janus Capital had stockholders’ equity of $1.7 billion, cash and investments of $653.6 million and outstanding debt of $404.2 million compared with stockholders’ equity of $1.7 billion, cash and investments of $608.4 million and outstanding debt of $403.3 million at the end of the prior quarter.
Cash flow from operations in the reported quarter was negative $104.3 million compared with $87.3 million in the second-quarter 2015.
Capital Deployment Activity
During the second quarter, Janus Capital repurchased over 1.66 million shares of its common stock at an average price of $14.59 per share and a total cost of $24.2 million.
Our Viewpoint
Janus Capital has the best-in-class investment boutique with potential for strong AUM and revenue improvement along with competitive leverage growth. Capital deployment activities of the company are also laudable. Moreover, the recent stake acquisition in Kapstream enhances Janus Capital’s fixed income assets.
Given its healthy balance sheet, we predict Janus Capital to perform well over the long haul while its equity-heavy portfolio makes it vulnerable to the equity market. Further, lower revenues are a key concern.
JANUS CAP GRP Price, Consensus and EPS Surprise
JANUS CAP GRP Price, Consensus and EPS Surprise | JANUS CAP GRP Quote
Janus Capital currently carries a Zacks Rank #3 (Hold).
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) reported second-quarter 2016 net income of 76 cents per share missing the Zacks Consensus Estimate of $1.13. Moreover, the reported figure decreased from the year-ago earnings of $1.24.
Notably, results included non-recurring operating charge associated with the compensation to certain clients in relation to the Dell appraisal rights matter which resulted in reduced net income by 39 cents per share.
Among others, Invesco Ltd. (IVZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to release June quarter-end 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 >>