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Fortress Investment Group LLC (FIG - Free Report) reported first-quarter 2017 pre-tax distributable earnings of 19 cents per share, missing the Zacks Consensus Estimate of 22 cents. However, the reported figure represents a year-over-year increase of 19%.
Elevated expenses were primarily responsible for the lower-than-expected results. Also, weakening balance sheet position was a headwind. However, a slight gain in revenues was a positive factor.
On a GAAP basis, net loss came in at $7 million compared with $16 million in the prior-year quarter.
Higher Expenses More than Offset Revenue Growth
GAAP total revenue for the quarter came in at $232.2 million, up slightly year over year. The increase was mainly attributable to a rise in management fees income from non-affiliates and expense reimbursements from affiliates. However, the reported figure lagged the Zacks Consensus Estimate of $258.7 million.
Other income summed $0.6 million, as against a loss of $40.2 million recorded in the prior-year quarter. This was primarily due to gains in the quarter versus losses incurred in the prior-year period. Also, lower losses from equity method investees resulted in income.
Total expenses climbed 16.8% year over year to $241.4 million. This increase was due to a rise in compensation, general and administrative costs.
As of Mar 31, 2017, assets under management (AUM) was $70.2 billion, was up nearly 1% sequentially. However, the reported figure was down slightly year over year. Also, the Logan Circle division witnessed net client outflows of nearly $0.4 billion.
Balance Sheet Position
As of Mar 31, 2017, cash and cash equivalents were $334.7 million, down from $397.1 million as of Dec 31, 2016.
As of the same date, debt obligations were $182.8 million, flat compared with the previous quarter.
Further, total uncalled capital aggregated $7.5 billion as of Mar 31, 2017, out of which approximately $4.8 billion is available for common investment purposes.
Our Viewpoint
Fortress Investment’s failure to compete with its bigger peers in the terms of AUM growth as well as its inefficient expense control mechanism are concerns.
Moreover, the company is expected to be acquired by Japan-based SoftBank Group Corp. in an all-cash deal by the second half of 2017. This makes us more apprehensive regarding its future prospects.
Fortress Investment Group LLC Price and EPS Surprise
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. Moreover, the bottom line came in 24% higher than the year-ago quarter.
Federated Investors, Inc. posted a positive earnings surprise of around 4% for first-quarter 2017, marking eighth straight quarter of earnings beat. Earnings per share of 49 cents beat the Zacks Consensus Estimate of 47 cents and improved 11% year over year.
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can 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.
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Fortress Investment (FIG) Lags Q1 Earnings, Costs Increase
Fortress Investment Group LLC (FIG - Free Report) reported first-quarter 2017 pre-tax distributable earnings of 19 cents per share, missing the Zacks Consensus Estimate of 22 cents. However, the reported figure represents a year-over-year increase of 19%.
Elevated expenses were primarily responsible for the lower-than-expected results. Also, weakening balance sheet position was a headwind. However, a slight gain in revenues was a positive factor.
On a GAAP basis, net loss came in at $7 million compared with $16 million in the prior-year quarter.
Higher Expenses More than Offset Revenue Growth
GAAP total revenue for the quarter came in at $232.2 million, up slightly year over year. The increase was mainly attributable to a rise in management fees income from non-affiliates and expense reimbursements from affiliates. However, the reported figure lagged the Zacks Consensus Estimate of $258.7 million.
Other income summed $0.6 million, as against a loss of $40.2 million recorded in the prior-year quarter. This was primarily due to gains in the quarter versus losses incurred in the prior-year period. Also, lower losses from equity method investees resulted in income.
Total expenses climbed 16.8% year over year to $241.4 million. This increase was due to a rise in compensation, general and administrative costs.
As of Mar 31, 2017, assets under management (AUM) was $70.2 billion, was up nearly 1% sequentially. However, the reported figure was down slightly year over year. Also, the Logan Circle division witnessed net client outflows of nearly $0.4 billion.
Balance Sheet Position
As of Mar 31, 2017, cash and cash equivalents were $334.7 million, down from $397.1 million as of Dec 31, 2016.
As of the same date, debt obligations were $182.8 million, flat compared with the previous quarter.
Further, total uncalled capital aggregated $7.5 billion as of Mar 31, 2017, out of which approximately $4.8 billion is available for common investment purposes.
Our Viewpoint
Fortress Investment’s failure to compete with its bigger peers in the terms of AUM growth as well as its inefficient expense control mechanism are concerns.
Moreover, the company is expected to be acquired by Japan-based SoftBank Group Corp. in an all-cash deal by the second half of 2017. This makes us more apprehensive regarding its future prospects.
Fortress Investment Group LLC Price and EPS Surprise
Fortress Investment Group LLC Price and EPS Surprise | Fortress Investment Group LLC Quote
Currently, Fortress Investment carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Other Investment Management Firms
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. Moreover, the bottom line came in 24% higher than the year-ago quarter.
Federated Investors, Inc. posted a positive earnings surprise of around 4% for first-quarter 2017, marking eighth straight quarter of earnings beat. Earnings per share of 49 cents beat the Zacks Consensus Estimate of 47 cents and improved 11% year over year.
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can 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.
Click here for Zacks' private trades >>