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Why Is Invesco (IVZ) Up 8.9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Invesco PLC (IVZ - Free Report) . Shares have added about 8.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Invesco Beats on Q4 Earnings as Expenses Decrease
Invesco reported fourth-quarter 2016 adjusted earnings of $0.59 per share, surpassing the Zacks Consensus Estimate of $0.57. 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 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 $0.55 per share compared with $201.9 million or $0.48 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 against 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.
Outlook
Management expects net revenue yield, excluding performance fees in 2017 to be down 1 basis point year over year. Moreover, management expects performance fees in the first quarter 2017 to be around $15–20 million, driven by U.K. investment trusts. For the remaining quarters, performance fees are anticipated to be around $5–7 million per quarter.
Also, the company believes that because of continued pressure on short-dated equity UITs as a result of the early adoption of DOL rules and a structural change in the pricing of real estate products, other revenues in 2017 will fall to $12–15 million per quarter.
On the cost front, management expects compensation expense in the first quarter 2017 to be up $20 million sequentially due to seasonal payroll taxes and a one month impact of base salary increases. However, this is expected to fall in the second quarter and then stabilize at $345 million per quarter for the remaining quarters of 2017.
The company expects market expenses in 2017 to be similar to 2016 level. Also, it expects G&A expenses in 2017 to be in line with the prior-year figure at around $65–67 million per quarter. However, property, office and technology expenses in 2017 are likely to increase to $88 million per quarter, owing to the large, technology related projects that would come into service, including investments around data and cyber security.
Management expects tax rate in 2017 to stay at 27%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Invesco's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'A'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for momentum investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Invesco (IVZ) Up 8.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for Invesco PLC (IVZ - Free Report) . Shares have added about 8.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Invesco Beats on Q4 Earnings as Expenses Decrease
Invesco reported fourth-quarter 2016 adjusted earnings of $0.59 per share, surpassing the Zacks Consensus Estimate of $0.57. 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 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 $0.55 per share compared with $201.9 million or $0.48 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 against 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.
Outlook
Management expects net revenue yield, excluding performance fees in 2017 to be down 1 basis point year over year. Moreover, management expects performance fees in the first quarter 2017 to be around $15–20 million, driven by U.K. investment trusts. For the remaining quarters, performance fees are anticipated to be around $5–7 million per quarter.
Also, the company believes that because of continued pressure on short-dated equity UITs as a result of the early adoption of DOL rules and a structural change in the pricing of real estate products, other revenues in 2017 will fall to $12–15 million per quarter.
On the cost front, management expects compensation expense in the first quarter 2017 to be up $20 million sequentially due to seasonal payroll taxes and a one month impact of base salary increases. However, this is expected to fall in the second quarter and then stabilize at $345 million per quarter for the remaining quarters of 2017.
The company expects market expenses in 2017 to be similar to 2016 level. Also, it expects G&A expenses in 2017 to be in line with the prior-year figure at around $65–67 million per quarter. However, property, office and technology expenses in 2017 are likely to increase to $88 million per quarter, owing to the large, technology related projects that would come into service, including investments around data and cyber security.
Management expects tax rate in 2017 to stay at 27%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Invesco PLC Price and Consensus
Invesco PLC Price and Consensus | Invesco PLC Quote
VGM Scores
At this time, Invesco's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'A'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for momentum investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.