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Investment Managers Earnings Due on Jul 25: TROW, RJF & More
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The investment management/brokerage industry, part of the broader Finance sector, had witnessed strong March-end quarter numbers backed by increased volatility and rising interest rates in the domestic economy. However, the steam somewhat subsided in the April-June quarter due to return of volatility to normalized levels.
The asset managers that have reported second-quarter 2018 earnings so far witnessed revenue growth on the back of increase in assets under management (AUM) and rise in investment advisory fees. Also, the companies reported steady inflows for the quarter.
Performance of equity markets remained favorable as reflected by nearly 3% growth of the S&P 500 Index. This is likely to have resulted in higher AUM. Thus, the related fees might also witness an increase, thereby boosting revenues.
Further, volatility-driven growth in trading revenues is likely to be muted in the second quarter. Though uncertainty, mainly related to the U.S.-China trade war and some other geo-political tensions induced volatility, client activity returned to normalized levels.
Equity underwriting fees are projected to improve due to strong equity issuances globally that might have been boosted by IPOs and follow-on offerings. Also, a potential rise in fees from increasing M&As in certain sectors will likely help pocket advisory fees. These are, however, expected to be somewhat offset by lower debt origination fees as rising rates will have limited corporates’ involvement in these activities.
On the cost front, as asset managers continue investing in technology to better compete with others, expenses might have escalated during the quarter.
Per the latest Earnings Preview, overall earnings for the finance sector in the quarter are expected to grow 24.7% year over year. This compares unfavorably with the prior-quarter growth of 25.1%.
Our quantitative model offers some insights into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Now, let’s take a look at some of the investment management stocks are that scheduled to announce their results tomorrow.
T. Rowe Price Group’s (TROW - Free Report) Zacks Consensus Estimate for second-quarter 2018 is pegged at $1.80 for the upcoming release, which indicates 20% year-over-year growth.
Revenues of T. Rowe are expected to grow with support from several planned initiatives in connection with launching investment strategies and vehicles, enhancing client-engagement capabilities, strengthening distribution channel and improving technology platform. However, management expects these efforts to keep costs elevated this year.
Raymond James’s (RJF - Free Report) Zacks Consensus Estimate is $1.64 for the fiscal third quarter. It reflects year-over-year growth of about 30.2%.
The company is likely to benefit from higher global M&A activities. Also, interest income is likely to rise with support from economic stabilization and a rise in demand for loans and higher rates. It remains committed to hire advisors and invests in franchises and thus, overall expenses are expected to increase.
Notably, the company delivered an average positive earnings surprise of 6% by beating estimates in each of the trailing four quarters as depicted in the chart below:
Raymond James Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for Legg Mason’s fiscal first-quarter earnings is pegged at 78 cents, indicating 18.2% year-over-year growth.
The asset manager’s performance is expected to reflect a rise in AUM. However, decline in performance fees will likely offset the positives. The Zacks Consensus Estimate for performance fees of $25 million reflects a 69.5% slump from the prior-year quarter.
Notably, with an Earnings ESP of +1.22% and a Zacks Rank of 3, chances of Legg Mason beating the Zacks Consensus Estimate in the quarter are high.
Though Evercore (EVR - Free Report) currently carries a Zacks Rank of 2, we cannot conclusively predict an earnings beat, as the company has an Earnings ESP of 0.00%. Also, the company’s earnings estimates have remained stable over the last seven days. However, the Zacks Consensus Estimate for second-quarter earnings of $1.40 indicates a 32.1% surge on a year-over-year basis.
The company is likely to report higher advisory fees due to upbeat M&A activities during the quarter. Also, AUM might also have increased, lending further support to the top line.
Notably, Evercore delivered positive surprises in all the trailing four quarters, with an average beat of 24.2% as shown in the chart below:
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Investment Managers Earnings Due on Jul 25: TROW, RJF & More
The investment management/brokerage industry, part of the broader Finance sector, had witnessed strong March-end quarter numbers backed by increased volatility and rising interest rates in the domestic economy. However, the steam somewhat subsided in the April-June quarter due to return of volatility to normalized levels.
The asset managers that have reported second-quarter 2018 earnings so far witnessed revenue growth on the back of increase in assets under management (AUM) and rise in investment advisory fees. Also, the companies reported steady inflows for the quarter.
Performance of equity markets remained favorable as reflected by nearly 3% growth of the S&P 500 Index. This is likely to have resulted in higher AUM. Thus, the related fees might also witness an increase, thereby boosting revenues.
Further, volatility-driven growth in trading revenues is likely to be muted in the second quarter. Though uncertainty, mainly related to the U.S.-China trade war and some other geo-political tensions induced volatility, client activity returned to normalized levels.
Equity underwriting fees are projected to improve due to strong equity issuances globally that might have been boosted by IPOs and follow-on offerings. Also, a potential rise in fees from increasing M&As in certain sectors will likely help pocket advisory fees. These are, however, expected to be somewhat offset by lower debt origination fees as rising rates will have limited corporates’ involvement in these activities.
On the cost front, as asset managers continue investing in technology to better compete with others, expenses might have escalated during the quarter.
Per the latest Earnings Preview, overall earnings for the finance sector in the quarter are expected to grow 24.7% year over year. This compares unfavorably with the prior-quarter growth of 25.1%.
Our quantitative model offers some insights into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Now, let’s take a look at some of the investment management stocks are that scheduled to announce their results tomorrow.
T. Rowe Price Group’s (TROW - Free Report) Zacks Consensus Estimate for second-quarter 2018 is pegged at $1.80 for the upcoming release, which indicates 20% year-over-year growth.
Revenues of T. Rowe are expected to grow with support from several planned initiatives in connection with launching investment strategies and vehicles, enhancing client-engagement capabilities, strengthening distribution channel and improving technology platform. However, management expects these efforts to keep costs elevated this year.
The company has an Earnings ESP of 0.00% and currently carries a Zacks Rank #2 (Buy). Hence, we cannot conclusively predict an earnings beat for the quarter. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
(Read more: Will High Costs Dampen T. Rowe Price Q2 Earnings?)
The stock surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 6.6% as reflected in the chart below:
T. Rowe Price Group, Inc. Price and EPS Surprise
T. Rowe Price Group, Inc. Price and EPS Surprise | T. Rowe Price Group, Inc. Quote
Raymond James’s (RJF - Free Report) Zacks Consensus Estimate is $1.64 for the fiscal third quarter. It reflects year-over-year growth of about 30.2%.
The company is likely to benefit from higher global M&A activities. Also, interest income is likely to rise with support from economic stabilization and a rise in demand for loans and higher rates. It remains committed to hire advisors and invests in franchises and thus, overall expenses are expected to increase.
However, it is difficult to conclusively predict an earnings beat as the company has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more: Investment Banking to Aid Raymond James Q3 Earnings)
Notably, the company delivered an average positive earnings surprise of 6% by beating estimates in each of the trailing four quarters as depicted in the chart below:
Raymond James Financial, Inc. Price and EPS Surprise
Raymond James Financial, Inc. Price and EPS Surprise | Raymond James Financial, Inc. Quote
The Zacks Consensus Estimate for Legg Mason’s fiscal first-quarter earnings is pegged at 78 cents, indicating 18.2% year-over-year growth.
The asset manager’s performance is expected to reflect a rise in AUM. However, decline in performance fees will likely offset the positives. The Zacks Consensus Estimate for performance fees of $25 million reflects a 69.5% slump from the prior-year quarter.
Notably, with an Earnings ESP of +1.22% and a Zacks Rank of 3, chances of Legg Mason beating the Zacks Consensus Estimate in the quarter are high.
(Read more: Legg Mason to Report Q1 Earnings: A Beat in Store?)
Legg Mason, Inc. Price and EPS Surprise
Legg Mason, Inc. Price and EPS Surprise | Legg Mason, Inc. Quote
Though Evercore (EVR - Free Report) currently carries a Zacks Rank of 2, we cannot conclusively predict an earnings beat, as the company has an Earnings ESP of 0.00%. Also, the company’s earnings estimates have remained stable over the last seven days. However, the Zacks Consensus Estimate for second-quarter earnings of $1.40 indicates a 32.1% surge on a year-over-year basis.
The company is likely to report higher advisory fees due to upbeat M&A activities during the quarter. Also, AUM might also have increased, lending further support to the top line.
Notably, Evercore delivered positive surprises in all the trailing four quarters, with an average beat of 24.2% as shown in the chart below:
Evercore Inc Price and EPS Surprise
Evercore Inc Price and EPS Surprise | Evercore Inc Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>