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Invesco's (IVZ) Q2 Earnings In Line, Revenues & AUM Rise Y/Y

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Invesco Ltd. (IVZ - Free Report) reported second-quarter 2018 adjusted earnings of 66 cents per share, in line with the Zacks Consensus Estimate. The figure was 3.1% above the prior-year quarter level.

Results were primarily supported by higher revenues and a rise in assets under management (AUM). However, increase in operating expenses was an undermining factor.

On a GAAP basis, net income attributable to common shareholders came in at $245.1 million or 59 cents per share, up from $239.6 million or 58 cents per share a year ago.

Revenues & Expenses Rise

GAAP operating revenues for the quarter were $1.36 billion, up 8.5% year over year. The figure lagged the Zacks Consensus Estimate of $1.40 billion. Adjusted net revenues increased 7.5% year over year to $974 million.

Adjusted operating expenses were $597.4 million, up 8.5% from the prior-year quarter. The rise was due to an increase in all expense components.

Adjusted operating margin for the quarter was 38.7% compared with 39.3% a year ago.

Strong AUM

As of Jun 30, 2018, AUM was $963.3 billion, up 12.2% year over year. The acquisition of the Guggenheim Investments' ETF business added $38.1 billion in AUM during the reported quarter.

Average AUM for the reported quarter totaled $973.9 billion, up 14.7% from the year-ago quarter. Further, the reported quarter witnessed long-term net outflows of $8 billion.

Our View

Invesco remains well positioned to benefit from improved global investment flows supported by a diversified footprint and product offering. Also, its inorganic growth strategy will drive growth.

However, high-debt levels of the company might adversely affect its profitability in the long run. Also, as the company plans to repay a significant portion of amounts borrowed (to finance acquisitions), it has suspended share purchases. Mounting expenses will likely continue to hamper bottom-line growth to some extent.

Invesco Ltd. Price, Consensus and EPS Surprise

 

Invesco Ltd. Price, Consensus and EPS Surprise | Invesco Ltd. Quote

Currently, Invesco carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Investment Managers

BlackRock’s (BLK - Free Report) second-quarter 2018 adjusted earnings of $6.66 per share outpaced the Zacks Consensus Estimate of $6.60. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, an increase in operating expenses acted as a headwind.

The Blackstone Group L.P. (BX - Free Report) reported second-quarter 2018 economic net income (ENI) of 90 cents per share, which handily outpaced the Zacks Consensus Estimate of 71 cents. The quarter saw a substantial jump in revenues and growth in assets under management, which was mainly driven by inflows. However, rise in expenses was the undermining factor.

Ameriprise Financial Inc.’s (AMP - Free Report) second-quarter 2018 adjusted operating earnings per share of $3.60 comfortably surpassed the Zacks Consensus Estimate of $3.51. Results benefited from an improvement in revenues. Also, growth in AUM and assets under administration supported earnings. However, a rise in expenses was an undermining factor.

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