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Fortress Investment (FIG) Beats on Q4 Earnings, Costs Up
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Fortress Investment Group LLC (FIG - Free Report) reported fourth-quarter 2016 pre-tax distributable earnings of 27 cents per share, outpacing the Zacks Consensus Estimate of 24 cents. However, the reported figure represents a year-over-year decline of 10%.
Better-than-expected results were primarily aided by growth in revenues, supported by a robust balance sheet position. However, elevated expenses and lower assets under management (AUM) were among the negatives.
On a GAAP basis, net income for the quarter came in at $165 million, up 42% year over year.
For 2016, pre-tax distributable earnings of 92 cents per share increased 5% year over year. In fact, the reported figure surpassed the Zacks Consensus Estimate of 89 cents. However, net income of $181 million for 2016 decreased 1% from a year ago.
Revenue Growth Partially Offset by Rise in Expenses
GAAP total revenue for the quarter came in at $438.3 million, up 5.7% year over year. The increase was mainly attributable to a rise in incentive income from both affiliates as well as non-affiliates. Also, the reported figure surpassed the Zacks Consensus Estimate of $245.2 million.
For 2016, total revenue came in at $1.2 billion, down 4.1% year over year. However, the figure surpassed the Zacks Consensus Estimate of $971.2 million.
Other income summed $22.9 million, as against a loss of $18.2 million recorded in the prior-year quarter. This was primarily due to gains in the quarter versus losses incurred by the company in the prior-year period. However, higher losses from equity method investees and a negative tax receivable agreement liability adjustment partially offset the increase.
Total expenses climbed 15.8% year over year to $278 million. This increase was due to a rise in all the expense categories.
As of Dec 31, 2016, AUM was $69.6 billion, down 1.3% year over year. However, the Logan Circle division witnessed net client inflows of nearly $1 billion.
Strong Balance Sheet
As of Dec 31, 2016, cash and cash equivalents were $397.1 million, up from $339.8 million as of Dec 31, 2015.
As of the same date, debt obligations were $182.8 million, down from $230.7 million as of Dec 31, 2015.
Further, total uncalled capital aggregated $6.9 billion as of Dec 31, 2016, out of which approximately $4.2 billion is available for common investment purposes.
Our Viewpoint
Though Fortress Investment depicted a decent performance in the fourth quarter, its failure to be competitive with its bigger peers in the terms of AUM growth as well as its inefficient expense control mechanism are concerns.
Moreover, on Feb 14, 2017, the company announced that it will be taken over by Japan-based SoftBank Group Corp. in an all cash deal. This makes us more apprehensive regarding its future prospects.
Fortress Investment Group LLC Price, Consensus and EPS Surprise
Among other asset managers, BlackRock, Inc. (BLK - Free Report) reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handedly surpassed the Zacks Consensus Estimate of $5.02. Moreover, the bottom line came in 8% higher than the year-ago quarter.
Affiliated Managers Group Inc. (AMG - Free Report) reported fourth-quarter 2016 economic earnings of $3.80 per share, outpacing the Zacks Consensus Estimate of $3.70. Also, earnings were up 5.8% year over year.
Ameriprise Financial, Inc.’s (AMP - Free Report) fourth-quarter 2016 operating earnings per share of $2.73 easily surpassed the Zacks Consensus Estimate of $2.43. Also, the figure represents a year-over-year increase of 11%.
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Fortress Investment (FIG) Beats on Q4 Earnings, Costs Up
Fortress Investment Group LLC (FIG - Free Report) reported fourth-quarter 2016 pre-tax distributable earnings of 27 cents per share, outpacing the Zacks Consensus Estimate of 24 cents. However, the reported figure represents a year-over-year decline of 10%.
Better-than-expected results were primarily aided by growth in revenues, supported by a robust balance sheet position. However, elevated expenses and lower assets under management (AUM) were among the negatives.
On a GAAP basis, net income for the quarter came in at $165 million, up 42% year over year.
For 2016, pre-tax distributable earnings of 92 cents per share increased 5% year over year. In fact, the reported figure surpassed the Zacks Consensus Estimate of 89 cents. However, net income of $181 million for 2016 decreased 1% from a year ago.
Revenue Growth Partially Offset by Rise in Expenses
GAAP total revenue for the quarter came in at $438.3 million, up 5.7% year over year. The increase was mainly attributable to a rise in incentive income from both affiliates as well as non-affiliates. Also, the reported figure surpassed the Zacks Consensus Estimate of $245.2 million.
For 2016, total revenue came in at $1.2 billion, down 4.1% year over year. However, the figure surpassed the Zacks Consensus Estimate of $971.2 million.
Other income summed $22.9 million, as against a loss of $18.2 million recorded in the prior-year quarter. This was primarily due to gains in the quarter versus losses incurred by the company in the prior-year period. However, higher losses from equity method investees and a negative tax receivable agreement liability adjustment partially offset the increase.
Total expenses climbed 15.8% year over year to $278 million. This increase was due to a rise in all the expense categories.
As of Dec 31, 2016, AUM was $69.6 billion, down 1.3% year over year. However, the Logan Circle division witnessed net client inflows of nearly $1 billion.
Strong Balance Sheet
As of Dec 31, 2016, cash and cash equivalents were $397.1 million, up from $339.8 million as of Dec 31, 2015.
As of the same date, debt obligations were $182.8 million, down from $230.7 million as of Dec 31, 2015.
Further, total uncalled capital aggregated $6.9 billion as of Dec 31, 2016, out of which approximately $4.2 billion is available for common investment purposes.
Our Viewpoint
Though Fortress Investment depicted a decent performance in the fourth quarter, its failure to be competitive with its bigger peers in the terms of AUM growth as well as its inefficient expense control mechanism are concerns.
Moreover, on Feb 14, 2017, the company announced that it will be taken over by Japan-based SoftBank Group Corp. in an all cash deal. This makes us more apprehensive regarding its future prospects.
Fortress Investment Group LLC Price, Consensus and EPS Surprise
Fortress Investment Group LLC Price, Consensus and EPS Surprise | Fortress Investment Group LLC Quote
Currently, Fortress Investment carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Investment Management Firms
Among other asset managers, BlackRock, Inc. (BLK - Free Report) reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handedly surpassed the Zacks Consensus Estimate of $5.02. Moreover, the bottom line came in 8% higher than the year-ago quarter.
Affiliated Managers Group Inc. (AMG - Free Report) reported fourth-quarter 2016 economic earnings of $3.80 per share, outpacing the Zacks Consensus Estimate of $3.70. Also, earnings were up 5.8% year over year.
Ameriprise Financial, Inc.’s (AMP - Free Report) fourth-quarter 2016 operating earnings per share of $2.73 easily surpassed the Zacks Consensus Estimate of $2.43. Also, the figure represents a year-over-year increase of 11%.
Everything You Need to Know About Snapchat BEFORE It Goes Public
You may be curious about the buzz surrounding Snap Inc.'s IPO on March 2. With the company expected to be valued around $22 billion, it is expected to be the largest IPO since 2014. But should you snap up this tech stock on Day 1?
In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges. You'll also learn about 4 other exciting tech companies with
jaw-dropping growth. Each could go public in the coming months.
Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the latest scoop. Download this IPO
Watch List today for free >>