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Why is an Earnings Beat Less Likely for Invesco (IVZ) in Q2?
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Invesco Ltd. (IVZ - Free Report) is slated to release second-quarter 2018 results on Jul 26, before the market opens. Its revenues and earnings for the to-be-reported quarter are projected to grow year over year.
In the last reported quarter, the company’s adjusted earnings were in-line with the Zacks Consensus Estimate. Results were primarily driven by an increase in revenues, net long-term inflows and assets under management (AUM) growth, offset by higher expenses.
Moreover, Invesco has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 4.2%.
However, activities of the company in the second quarter failed to encourage analysts to revise estimates upward. As a result, the Zacks Consensus Estimate for earnings of 67 cents decreased 1.5% over the past 30 days. Nevertheless, the figure reflects year-over-year improvement of 4.7%.
Furthermore, the Zacks Consensus Estimate for sales for the to-be-reported quarter is $1.40 billion, which reflects growth of 11.6% year over year.
Invesco’s price performance does not seem very impressive. Its shares have lost 15.4% in the last three months compared with 1% growth recorded by the industry.
Will the price performance improve post Q2 earnings? Before having a look at what our quantitative model predicts, let’s check the factors that are likely to impact the quarter’s results.
Factors to Influence Q2 Results
Per the monthly metrics data published by Invesco, its preliminary AUM of $963.3 billion as of Jun 30, 2018, was up from $934.2 billion as of Mar 31, 2018. Given the increase in AUM in the quarter, the related fee is also expected to witness some improvement.
In fact, management expects performance fees for the second quarter to be around $10-$15 million, up from $9.1 million reported in the last quarter. Adjusted other revenues are expected to be nearly $16-$17 million for the to-be-reported quarter.
On the cost front, management anticipates compensation expenses to increase sequentially to nearly $400-$405 million in the to-be-reported quarter.
The company expects market expenses to be nearly $32 million in the second quarter, up sequentially. Further, property, office and technology costs are expected to be $102-$104 million, stable or up marginally on a sequential basis.
Earnings Whispers
According to our quantitative model, chances of Invesco beating the Zacks Consensus Estimate in the second quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco is -0.56%.
Zacks Rank: Invesco currently has a Zacks Rank #4 (Sell), which further decreases the predictive power of ESP.
Stocks to Consider
Here are a few stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
Hilltop Holdings Inc. (HTH - Free Report) is also slated to release results on Jul 26. It has an Earnings ESP of +0.40% and carries a Zacks Rank #3.
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.89% and carries a Zacks Rank of 2. The company is slated to release results on Jul 26.
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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.
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Why is an Earnings Beat Less Likely for Invesco (IVZ) in Q2?
Invesco Ltd. (IVZ - Free Report) is slated to release second-quarter 2018 results on Jul 26, before the market opens. Its revenues and earnings for the to-be-reported quarter are projected to grow year over year.
In the last reported quarter, the company’s adjusted earnings were in-line with the Zacks Consensus Estimate. Results were primarily driven by an increase in revenues, net long-term inflows and assets under management (AUM) growth, offset by higher expenses.
Moreover, Invesco has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 4.2%.
Invesco Ltd. Price and EPS Surprise
Invesco Ltd. Price and EPS Surprise | Invesco Ltd. Quote
However, activities of the company in the second quarter failed to encourage analysts to revise estimates upward. As a result, the Zacks Consensus Estimate for earnings of 67 cents decreased 1.5% over the past 30 days. Nevertheless, the figure reflects year-over-year improvement of 4.7%.
Furthermore, the Zacks Consensus Estimate for sales for the to-be-reported quarter is $1.40 billion, which reflects growth of 11.6% year over year.
Invesco’s price performance does not seem very impressive. Its shares have lost 15.4% in the last three months compared with 1% growth recorded by the industry.
Will the price performance improve post Q2 earnings? Before having a look at what our quantitative model predicts, let’s check the factors that are likely to impact the quarter’s results.
Factors to Influence Q2 Results
Per the monthly metrics data published by Invesco, its preliminary AUM of $963.3 billion as of Jun 30, 2018, was up from $934.2 billion as of Mar 31, 2018. Given the increase in AUM in the quarter, the related fee is also expected to witness some improvement.
In fact, management expects performance fees for the second quarter to be around $10-$15 million, up from $9.1 million reported in the last quarter. Adjusted other revenues are expected to be nearly $16-$17 million for the to-be-reported quarter.
On the cost front, management anticipates compensation expenses to increase sequentially to nearly $400-$405 million in the to-be-reported quarter.
The company expects market expenses to be nearly $32 million in the second quarter, up sequentially. Further, property, office and technology costs are expected to be $102-$104 million, stable or up marginally on a sequential basis.
Earnings Whispers
According to our quantitative model, chances of Invesco beating the Zacks Consensus Estimate in the second quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Invesco is -0.56%.
Zacks Rank: Invesco currently has a Zacks Rank #4 (Sell), which further decreases the predictive power of ESP.
Stocks to Consider
Here are a few stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
SVB Financial Group is slated to report second-quarter 2018 results on Jul 26. It has an Earnings ESP of +1.26% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hilltop Holdings Inc. (HTH - Free Report) is also slated to release results on Jul 26. It has an Earnings ESP of +0.40% and carries a Zacks Rank #3.
Cullen/Frost Bankers, Inc. (CFR - Free Report) has an Earnings ESP of +0.89% and carries a Zacks Rank of 2. The company is slated to release results on Jul 26.
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 >>