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Will Invesco (IVZ) Stock Continue to Rise Post Q3 Earnings?
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Invesco Ltd. (IVZ - Free Report) is slated to release third-quarter 2016 results on Thursday, Oct 27, before the market opens.
Last quarter, Invesco’s adjusted earnings surpassed the Zacks Consensus Estimate primarily due to a decline in operating expenses. However, soft revenues as well as weakness in assets under management (AUM) were the undermining factors.
Following the earnings beat, shares of Invesco gained nearly 23% during the three months ended Sep 30, 2016.
Moreover, analysts seem to be happy with Invesco’s performance in the just concluded quarter. The company has witnessed five upward revisions in earnings estimates (versus one downward revision) over the last 30 days. Notably, the Zacks Consensus Estimate of 61 cents remained stable over the last seven days.
Further, Invesco has a decent earnings surprise history, as evident from the chart below:
Invesco’s expenses are expected to have remained stable at the second-quarter level primarily due to flat foreign exchange activity. Further, management expects expense relief of around $30–$45 million to accrue from its cost optimization activities by the end of the year. So, a certain portion of this benefit should be recorded in the upcoming release.
On the revenue front, net revenue (excluding performance fees) is projected to have remained flat during the quarter. Also, discrete items are expected to have remained stable at the second-quarter level.
Notably, management has an organic growth target of 3–5%, which it expects to enter this year. Also, management expects margins to be on an upward trajectory, as the company continues to grow organically and employ cost curtailment techniques. Additionally, management expects fees to improve during the quarter.
However, per Invesco’s latest preliminary month-end AUM report, as of Sep 30, 2016, total AUM fell 0.1% sequentially, depicting deteriorated Money Market and Equity AUMs. This was partially offset by an improvement in Alternatives, Fixed Income and Balanced AUMs.
Therefore, overall top-line growth should remain muted during the quarter.
Earnings Whispers
Our quantitative model does not conclusively predict an earnings beat for Invesco this time around. 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. Unfortunately, this is not the case here as elaborated below:
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 of 61 cents.
Zacks Rank: Invesco’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
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:
Raymond James Financial, Inc. (RJF - Free Report) is slated to release its results on Oct 26. The company has an Earnings ESP of +2.04% and carries a Zacks Rank #2 (Buy).
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #3. It is scheduled to report results on Oct 26.
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Will Invesco (IVZ) Stock Continue to Rise Post Q3 Earnings?
Invesco Ltd. (IVZ - Free Report) is slated to release third-quarter 2016 results on Thursday, Oct 27, before the market opens.
Last quarter, Invesco’s adjusted earnings surpassed the Zacks Consensus Estimate primarily due to a decline in operating expenses. However, soft revenues as well as weakness in assets under management (AUM) were the undermining factors.
Following the earnings beat, shares of Invesco gained nearly 23% during the three months ended Sep 30, 2016.
Moreover, analysts seem to be happy with Invesco’s performance in the just concluded quarter. The company has witnessed five upward revisions in earnings estimates (versus one downward revision) over the last 30 days. Notably, the Zacks Consensus Estimate of 61 cents remained stable over the last seven days.
Further, Invesco has a decent earnings surprise history, as evident from the chart below:
INVESCO LTD Price and EPS Surprise
INVESCO LTD Price and EPS Surprise | INVESCO LTD Quote
Factors to Influence Q3 Results
Invesco’s expenses are expected to have remained stable at the second-quarter level primarily due to flat foreign exchange activity. Further, management expects expense relief of around $30–$45 million to accrue from its cost optimization activities by the end of the year. So, a certain portion of this benefit should be recorded in the upcoming release.
On the revenue front, net revenue (excluding performance fees) is projected to have remained flat during the quarter. Also, discrete items are expected to have remained stable at the second-quarter level.
Notably, management has an organic growth target of 3–5%, which it expects to enter this year. Also, management expects margins to be on an upward trajectory, as the company continues to grow organically and employ cost curtailment techniques. Additionally, management expects fees to improve during the quarter.
However, per Invesco’s latest preliminary month-end AUM report, as of Sep 30, 2016, total AUM fell 0.1% sequentially, depicting deteriorated Money Market and Equity AUMs. This was partially offset by an improvement in Alternatives, Fixed Income and Balanced AUMs.
Therefore, overall top-line growth should remain muted during the quarter.
Earnings Whispers
Our quantitative model does not conclusively predict an earnings beat for Invesco this time around. 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. Unfortunately, this is not the case here as elaborated below:
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 of 61 cents.
Zacks Rank: Invesco’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
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:
Raymond James Financial, Inc. (RJF - Free Report) is slated to release its results on Oct 26. The company has an Earnings ESP of +2.04% and carries a Zacks Rank #2 (Buy).
Lazard Ltd. (LAZ - Free Report) is scheduled to report its results on Oct 27.It has an Earnings ESP of +3.90% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #3. It is scheduled to report results on Oct 26.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>