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Invesco (IVZ) Beats on Q4 Earnings as Expenses Decrease
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Invesco Ltd. (IVZ - Free Report) reported fourth-quarter 2016 adjusted earnings of 59 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line came in 1.7% higher than the prior-year quarter tally.
Better-than-expected results were primarily driven by a fall in operating expenses. The company also witnessed an improvement in assets under management (AUM). However, lower revenues acted as a headwind.
On a GAAP basis, net income attributable to common shareholders came in at $226.5 million or 55 cents per share compared with $201.9 million or 48 cents per share a year ago.
The company reported full-year adjusted earnings per share of $2.23, outpacing the Zacks Consensus Estimate of $2.22. However, the figure decreased 8.6% year over year. For 2016, GAAP net income came in at $854.2 million, down 11.8% from the prior year.
GAAP operating revenues for the quarter were $1.19 billion, down 3.6% year over year. However, the figure was in line with the Zacks Consensus Estimate.
For 2016, GAAP operating revenues were $4.73 billion, down 7.6% year over year. Also, the figure missed the Zacks Consensus Estimate of $4.78 billion.
Adjusted net revenue fell 2.5% year over year to $863.8 million. The decrease was largely due to a fall in investment management fees and other revenues.
Adjusted operating expenses were $527.8 million, down 0.5% from the prior-year quarter. The decline was attributable to a fall in all expense components except property, office and technology costs, and marketing expenses.
Adjusted operating margin for the quarter was 38.9% compared with 40.1% a year ago.
Strong AUM
As of Dec 31, 2016, AUM grew 4.8% year over year to $812.9 billion. Average AUM for the quarter totaled $809.0 billion, up 3.2% from the year-ago quarter. However, the reported quarter witnessed long-term net outflows of $2.7 billion compared with inflows of $3.9 billion in the prior-year quarter.
Share Repurchase
In the reported quarter, Invesco repurchased shares worth $150 million at an average price of $31.43 per share.
Our View
Invesco remains well positioned to benefit from improved global investment flows, supported by a diversified footprint and product offering. Also, the company’s steady capital deployment activities will continue to boost investors’ confidence in the stock.
However, high debt level and elevated expenses are anticipated to weigh on Invesco’s performance in the upcoming quarters. The company is undertaking initiatives to transform key business support functions for boosting efficiency. But the impact of the same is not expected to be realized any time soon as it continues to invest in franchise.
BlackRock, Inc. (BLK - Free Report) reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handily surpassed the Zacks Consensus Estimate of $5.02. Better-than-expected results were primarily driven by a decline in total expenses. Also, higher revenues for the quarter acted as a tailwind.
Waddell & Reed Financial Inc. is slated to report results on Jan 31 and Ameriprise Financial Inc. (AMP - Free Report) is scheduled to report on Feb 1.
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Invesco (IVZ) Beats on Q4 Earnings as Expenses Decrease
Invesco Ltd. (IVZ - Free Report) reported fourth-quarter 2016 adjusted earnings of 59 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line came in 1.7% higher than the prior-year quarter tally.
Better-than-expected results were primarily driven by a fall in operating expenses. The company also witnessed an improvement in assets under management (AUM). However, lower revenues acted as a headwind.
On a GAAP basis, net income attributable to common shareholders came in at $226.5 million or 55 cents per share compared with $201.9 million or 48 cents per share a year ago.
The company reported full-year adjusted earnings per share of $2.23, outpacing the Zacks Consensus Estimate of $2.22. However, the figure decreased 8.6% year over year. For 2016, GAAP net income came in at $854.2 million, down 11.8% from the prior year.
Lower Operating Costs Offset Revenue Dip
GAAP operating revenues for the quarter were $1.19 billion, down 3.6% year over year. However, the figure was in line with the Zacks Consensus Estimate.
For 2016, GAAP operating revenues were $4.73 billion, down 7.6% year over year. Also, the figure missed the Zacks Consensus Estimate of $4.78 billion.
Adjusted net revenue fell 2.5% year over year to $863.8 million. The decrease was largely due to a fall in investment management fees and other revenues.
Adjusted operating expenses were $527.8 million, down 0.5% from the prior-year quarter. The decline was attributable to a fall in all expense components except property, office and technology costs, and marketing expenses.
Adjusted operating margin for the quarter was 38.9% compared with 40.1% a year ago.
Strong AUM
As of Dec 31, 2016, AUM grew 4.8% year over year to $812.9 billion. Average AUM for the quarter totaled $809.0 billion, up 3.2% from the year-ago quarter. However, the reported quarter witnessed long-term net outflows of $2.7 billion compared with inflows of $3.9 billion in the prior-year quarter.
Share Repurchase
In the reported quarter, Invesco repurchased shares worth $150 million at an average price of $31.43 per share.
Our View
Invesco remains well positioned to benefit from improved global investment flows, supported by a diversified footprint and product offering. Also, the company’s steady capital deployment activities will continue to boost investors’ confidence in the stock.
However, high debt level and elevated expenses are anticipated to weigh on Invesco’s performance in the upcoming quarters. The company is undertaking initiatives to transform key business support functions for boosting efficiency. But the impact of the same is not expected to be realized any time soon as it continues to invest in franchise.
Invesco PLC Price, Consensus and EPS Surprise
Invesco PLC Price, Consensus and EPS Surprise | Invesco PLC Quote
Currently, Invesco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc. (BLK - Free Report) reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handily surpassed the Zacks Consensus Estimate of $5.02. Better-than-expected results were primarily driven by a decline in total expenses. Also, higher revenues for the quarter acted as a tailwind.
Waddell & Reed Financial Inc. is slated to report results on Jan 31 and Ameriprise Financial Inc. (AMP - Free Report) is scheduled to report on Feb 1.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>