We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Waddell & Reed's (WDR) Stock Down 3.1% on Q1 Earnings Lag
Read MoreHide Full Article
Waddell & Reed Financial Inc.’s shares declined 3.1% following the release of the company’s first-quarter 2017 results. Earnings of 39 cents per share lagged the Zacks Consensus Estimate of 42 cents. Also, it compared unfavorably with the year-ago quarter’s earnings of 45 cents.
Lower-than-expected results were primarily due to a decline in revenues, partially offset by lower expenses. Also, lower assets under management (AUM) were an undermining factor. However, balance sheet remained strong. Further, a fall in net outflows was a positive for the company.
Net income attributable to Waddell & Reed totaled $33.1 million, compared with nearly $37 million in the prior-year quarter.
Revenues, Expenses & AUM Decline
Operating revenues for the quarter fell 11.5% year over year to $286.6 million, reflecting a decline in all components. Moreover, it marginally lagged the Zacks Consensus Estimate of $286.9 million.
Gross sales declined 20.4% year over year to $2.92 billion. Redemptions declined 36.6% year over year to $6.31 billion. However, net outflows were $3.39 billion at the quarter end, down from $6.28 billion at the end of the prior-year quarter.
Operating expenses decreased 7.3% year over year to $234 million. The decline was primarily due to a fall in underwriting and distribution expenses, and compensation and related costs.
Operating margin was 18.4%, down from 22.1% a year ago.
As of Mar 31, 2017, AUM totaled $81.08 billion, reflecting a decline of 14.8% from the Mar 31, 2016 level.
As of Mar 31, 2017, the company’s cash and cash equivalents as well as investment securities totaled $874.5 million. Moreover, long-term debt was $94.7 million and stockholders’ equity was $848.9 million.
Deteriorating Performance of the Distribution Channels
At Retail Broker-Dealer channel, gross sales decreased 8.4% year over year to $978 million. Net outflows totaled $1.13 billion, up drastically from the year-ago figure of $301 million.
At Retail Unaffiliated Distribution channel, gross sales declined 16.1% year over year to $1.80 billion. However, net outflows were $1.67 billion, declining 68.9% year over year.
Gross sales at the Institutional channel were $142 million, declining 68.7% from the year-ago quarter. The segment witnessed net outflows of $585 million, declining 2.7% from the prior-year quarter.
Share Repurchase
Waddell & Reed bought back 476,882 shares for $7.98 million during the quarter. The company returned $46.7 million to its shareholders in the form of dividends and share repurchases during the quarter.
Our Viewpoint
Waddell & Reed has been facing continued pressure on its revenues, which is expected to hamper its financials in the near term. A declining trend in AUM is another key concern. Though the company is taking initiatives through Project E to boost its top line, it will take some time to witness a rebound. Nevertheless, the company’s continued investments in the Retail-Broker Dealer channel might help boost revenues, inflows and AUM, going forward.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
Janus Capital Group, Inc.’s first-quarter 2017 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate of 21 cents. Better-than-expected results were driven by an increase in revenues. However, rise in operating expenses was a concern.
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected result was largely driven by an improvement in revenues, partially offset by an increase in expenses.
Lazard Ltd.’s (LAZ - Free Report) first-quarter 2017 adjusted earnings of 83 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter. Earnings were primarily driven by higher revenues.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Waddell & Reed's (WDR) Stock Down 3.1% on Q1 Earnings Lag
Waddell & Reed Financial Inc.’s shares declined 3.1% following the release of the company’s first-quarter 2017 results. Earnings of 39 cents per share lagged the Zacks Consensus Estimate of 42 cents. Also, it compared unfavorably with the year-ago quarter’s earnings of 45 cents.
Lower-than-expected results were primarily due to a decline in revenues, partially offset by lower expenses. Also, lower assets under management (AUM) were an undermining factor. However, balance sheet remained strong. Further, a fall in net outflows was a positive for the company.
Net income attributable to Waddell & Reed totaled $33.1 million, compared with nearly $37 million in the prior-year quarter.
Revenues, Expenses & AUM Decline
Operating revenues for the quarter fell 11.5% year over year to $286.6 million, reflecting a decline in all components. Moreover, it marginally lagged the Zacks Consensus Estimate of $286.9 million.
Gross sales declined 20.4% year over year to $2.92 billion. Redemptions declined 36.6% year over year to $6.31 billion. However, net outflows were $3.39 billion at the quarter end, down from $6.28 billion at the end of the prior-year quarter.
Operating expenses decreased 7.3% year over year to $234 million. The decline was primarily due to a fall in underwriting and distribution expenses, and compensation and related costs.
Operating margin was 18.4%, down from 22.1% a year ago.
As of Mar 31, 2017, AUM totaled $81.08 billion, reflecting a decline of 14.8% from the Mar 31, 2016 level.
As of Mar 31, 2017, the company’s cash and cash equivalents as well as investment securities totaled $874.5 million. Moreover, long-term debt was $94.7 million and stockholders’ equity was $848.9 million.
Deteriorating Performance of the Distribution Channels
At Retail Broker-Dealer channel, gross sales decreased 8.4% year over year to $978 million. Net outflows totaled $1.13 billion, up drastically from the year-ago figure of $301 million.
At Retail Unaffiliated Distribution channel, gross sales declined 16.1% year over year to $1.80 billion. However, net outflows were $1.67 billion, declining 68.9% year over year.
Gross sales at the Institutional channel were $142 million, declining 68.7% from the year-ago quarter. The segment witnessed net outflows of $585 million, declining 2.7% from the prior-year quarter.
Share Repurchase
Waddell & Reed bought back 476,882 shares for $7.98 million during the quarter. The company returned $46.7 million to its shareholders in the form of dividends and share repurchases during the quarter.
Our Viewpoint
Waddell & Reed has been facing continued pressure on its revenues, which is expected to hamper its financials in the near term. A declining trend in AUM is another key concern. Though the company is taking initiatives through Project E to boost its top line, it will take some time to witness a rebound. Nevertheless, the company’s continued investments in the Retail-Broker Dealer channel might help boost revenues, inflows and AUM, going forward.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise | Waddell & Reed Financial, Inc. Quote
Currently, Waddell & Reed carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Investment Managers
Janus Capital Group, Inc.’s first-quarter 2017 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate of 21 cents. Better-than-expected results were driven by an increase in revenues. However, rise in operating expenses was a concern.
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected result was largely driven by an improvement in revenues, partially offset by an increase in expenses.
Lazard Ltd.’s (LAZ - Free Report) first-quarter 2017 adjusted earnings of 83 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter. Earnings were primarily driven by higher revenues.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>