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WisdomTree (WETF) Shares Fall on Q4 Earnings Miss, Costs Up
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Shares of WisdomTree Investments declined nearly 13.8% following its fourth-quarter 2017 earnings release. The company reported adjusted earnings of 4 cents per share, which missed the Zacks Consensus Estimate of 7 cents. However, the bottom line compares favorably with 3 cents in the prior-year quarter.
Rise in expenses and a fall in liquidity position were the undermining factors. Also, the company continued to witness outflows in European listed business. However, growth in assets under management (AUM) and higher revenues were the positives.
Including charges related to the tax reform and other one-time items, WisdomTree’s net income came in at $0.2 million compared with $2.5 million recorded in the prior-year quarter.
For 2017, net income was $27.2 million or 20 cents per share compared with $26.2 million or 19 cents reported in the year-ago quarter.
Revenues & Expenses Rise
For 2017, revenues came in at $237.4 million, up 8.2% year over year.
Total revenues for the fourth quarter were $61.4 million, up 20.8% year over year. Also, the reported figure was in line with the Zacks Consensus Estimate.
Advisory fees rose 20.8% year over year to $60.8 million. The rise stemmed from higher average global AUM.
Expenses increased 31.8% year over year to $55.7 million. This rise is largely attributable to higher compensation, professional and consulting fees and third-party sharing arrangement expenses.
Pre-tax profit margin dropped to 9.2% from 16.8% recorded last year.
Segment Performance
U.S. Listed Business: The segment’s total revenues for the quarter were nearly $58.1 million, up 19.2% from the prior-year quarter. Gross margin came in at 82.1%, up from 81% in the year-ago quarter. The expansion was primarily due to higher revenues.
As of Dec 31, 2017, U.S. listed AUM was $46.8 billion, up 16.6% year over year. The segment witnessed net inflows of $0.3 billion in the quarter, up from $0.1 billion in prior-year quarter.
European Listed Business: The segment’s total revenues were $3.2 million, up 65.4% from the prior-year quarter.
The company recorded European listed AUM of $1.8 billion as of Dec 31, 2017, up 76.1% from year-ago quarter. The segment reported net outflows of $65.7 million compared with $25.8 million in the same period last year.
Canadian Listed Business: The segment reported AUM of $305.5 million, up significantly year over year. Also, it recorded net inflows of $15 million during the quarter.
Balance Sheet
WisdomTree had cash and cash equivalents of $54.2 million as of Dec 31, 2017, compared with $92.7 million as of Dec 31, 2016. Investments totaled $35.8 million at the end of the quarter.
The company’s stockholders’ equity was $193 million compared with $201.3 million as of Dec 31, 2016.
Our Viewpoint
Though WisdomTree’s results do not reflect a strong quarter, we remain optimistic about its performance in the future due to its inorganic growth strategies. We believe that the company’s efforts in innovations and new product offerings, diverse footprint, new sales and distribution channels, position it well for the long run.
However, stringent regulations might put the company’s financials under pressure in the near term.
WisdomTree Investments, Inc. Price and EPS Surprise
The Charles Schwab Corp.’s (SCHW - Free Report) fourth-quarter 2017 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 41 cents. Results exclude one-time tax expense of 3 cents per share related to the tax act. Also, earnings increased 22% from the prior-year quarter.
Raymond James Financial (RJF - Free Report) announced first-quarter fiscal 2018 (ended Dec 31) adjusted earnings per share of $1.61, which surpassed the Zacks Consensus Estimate of $1.43. Also, on a year-over-year basis, the bottom line surged 33%.
Interactive Brokers Group (IBKR - Free Report) released its fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings were higher than the prior-year quarter figure of 7 cents per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
WisdomTree (WETF) Shares Fall on Q4 Earnings Miss, Costs Up
Shares of WisdomTree Investments declined nearly 13.8% following its fourth-quarter 2017 earnings release. The company reported adjusted earnings of 4 cents per share, which missed the Zacks Consensus Estimate of 7 cents. However, the bottom line compares favorably with 3 cents in the prior-year quarter.
Rise in expenses and a fall in liquidity position were the undermining factors. Also, the company continued to witness outflows in European listed business. However, growth in assets under management (AUM) and higher revenues were the positives.
Including charges related to the tax reform and other one-time items, WisdomTree’s net income came in at $0.2 million compared with $2.5 million recorded in the prior-year quarter.
For 2017, net income was $27.2 million or 20 cents per share compared with $26.2 million or 19 cents reported in the year-ago quarter.
Revenues & Expenses Rise
For 2017, revenues came in at $237.4 million, up 8.2% year over year.
Total revenues for the fourth quarter were $61.4 million, up 20.8% year over year. Also, the reported figure was in line with the Zacks Consensus Estimate.
Advisory fees rose 20.8% year over year to $60.8 million. The rise stemmed from higher average global AUM.
Expenses increased 31.8% year over year to $55.7 million. This rise is largely attributable to higher compensation, professional and consulting fees and third-party sharing arrangement expenses.
Pre-tax profit margin dropped to 9.2% from 16.8% recorded last year.
Segment Performance
U.S. Listed Business: The segment’s total revenues for the quarter were nearly $58.1 million, up 19.2% from the prior-year quarter. Gross margin came in at 82.1%, up from 81% in the year-ago quarter. The expansion was primarily due to higher revenues.
As of Dec 31, 2017, U.S. listed AUM was $46.8 billion, up 16.6% year over year. The segment witnessed net inflows of $0.3 billion in the quarter, up from $0.1 billion in prior-year quarter.
European Listed Business: The segment’s total revenues were $3.2 million, up 65.4% from the prior-year quarter.
The company recorded European listed AUM of $1.8 billion as of Dec 31, 2017, up 76.1% from year-ago quarter. The segment reported net outflows of $65.7 million compared with $25.8 million in the same period last year.
Canadian Listed Business: The segment reported AUM of $305.5 million, up significantly year over year. Also, it recorded net inflows of $15 million during the quarter.
Balance Sheet
WisdomTree had cash and cash equivalents of $54.2 million as of Dec 31, 2017, compared with $92.7 million as of Dec 31, 2016. Investments totaled $35.8 million at the end of the quarter.
The company’s stockholders’ equity was $193 million compared with $201.3 million as of Dec 31, 2016.
Our Viewpoint
Though WisdomTree’s results do not reflect a strong quarter, we remain optimistic about its performance in the future due to its inorganic growth strategies. We believe that the company’s efforts in innovations and new product offerings, diverse footprint, new sales and distribution channels, position it well for the long run.
However, stringent regulations might put the company’s financials under pressure in the near term.
WisdomTree Investments, Inc. Price and EPS Surprise
WisdomTree Investments, Inc. Price and EPS Surprise | WisdomTree Investments, Inc. Quote
WisdomTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Competitive Landscape
The Charles Schwab Corp.’s (SCHW - Free Report) fourth-quarter 2017 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 41 cents. Results exclude one-time tax expense of 3 cents per share related to the tax act. Also, earnings increased 22% from the prior-year quarter.
Raymond James Financial (RJF - Free Report) announced first-quarter fiscal 2018 (ended Dec 31) adjusted earnings per share of $1.61, which surpassed the Zacks Consensus Estimate of $1.43. Also, on a year-over-year basis, the bottom line surged 33%.
Interactive Brokers Group (IBKR - Free Report) released its fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings were higher than the prior-year quarter figure of 7 cents per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>