We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Federated (FII) Q3 Earnings Beat Estimates, AUM Goes Up
Read MoreHide Full Article
Federated Investors, Inc. reported positive earnings surprise of 9.3% in third-quarter 2018. Earnings per share of 59 cents surpassed the Zacks Consensus Estimate of 54 cents. Moreover, the figure compares favorably with the prior-year quarter earnings of 56 cents.
Higher revenues and improved assets under management (AUM) were positives. Notably, completion of acquisition of Hermes Fund Managers Limited (Hermes), beginning Jul 1, 2018, positively drove the results. However, elevated expenses were an undermining factor.
Net income for the reported quarter came in at $59.6 million compared with $56.4 million in the year-ago quarter.
Uptrend in Revenues, Costs Escalate
Total revenues in the third quarter climbed 11% year over year to $308.6 million. Additionally, the revenue figure outpaced the Zacks Consensus Estimate of $283 million.
The year-over-year upswing in revenues mainly stemmed from the consolidation of Hermes' revenues, partly countered by the adoption of new revenue-recognition accounting principle. Further, higher voluntary fee waivers for certain money market funds for competitive purposes unfavorably impacted revenues.
Also, net investment advisory fees jumped 17% year over year to $217 million. In addition, administrative service fees were up 5% year over year to $49.9 million. However, net service fees (other) marked a 9% decline, amounting to $41.7 million.
During the quarter under review, Federated derived 33% of its revenues from money market assets, 66% from equity and fixed-income assets, and remaining 1% from sources other than managed assets.
Furthermore, due to fall in net investment income and higher debt expenses, the company recorded non-operating income of $1.8 million in the quarter, down 20% year over year.
Total operating expenses escalated 20% year over year to $226.7 million. The rise was primarily due to the consolidation of Hermes' expenses, partly offset by drop in distribution expenses associated with change in average money-market fund assets mix and the adoption of the new revenue-recognition accounting standard.
Steady Asset Position
As of Sep 30, 2018, total AUM was a record $437.2 billion — up 20% year over year. Average managed assets were $433.9 billion, up 20% from the prior-year quarter.
Federated witnessed equity assets of $84.1 billion, up 36% year over year. Also, money market mutual fund assets came in at $183 billion, up 3% year over year.
Further, fixed-income assets grew 24% year over year to $65.4 billion. Additionally, money-market assets increased 8% year over year to $264.2 billion.
As of Sep 30, 2018, cash and other investments were $157.1 million and total long-term debt totaled $160 million, compared with $369.5 million and $170 million, respectively, as of Dec 31, 2017.
Capital Deployment Update
During the Sep-end quarter, the company repurchased 276,982 shares of Federated class B common stock, for $5.9 million.
Our Viewpoint
Federated displays substantial growth potential supported by its diverse asset and product mix, as well as a solid liquidity position. In addition, strategic acquisitions are anticipated to be favorable for the company. Moreover, higher revenues could aid the company’s bottom-line performance, moving ahead. Nonetheless, higher expenses remain a concern.
Federated Investors, Inc. Price, Consensus and EPS Surprise
Blackstone (BX - Free Report) reported third-quarter 2018 economic net income (ENI) of 76 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. The figure also improved 12% from the prior-year quarter. Results benefited from increase in revenues, which was supported by growth in assets under management and inflows. However, rise in expenses was the undermining factor.
Invesco (IVZ - Free Report) reported adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny, in the Jul-Sep quarter. Also, the figure came in 7% lower than the prior-year tally. Results were primarily supported by slight GAAP revenue growth and a rise in AUM. However, flaring up operating expenses remained an undermining factor.
Ameriprise Financial Services (AMP - Free Report) came out with quarterly earnings of $3.74 per share, beating the Zacks Consensus Estimate of $3.61 for the recently-reported quarter. This compares to earnings of $3.53 per share a year ago. These figures are adjusted for non-recurring items. The quarterly report represents an earnings surprise of 3.60%.
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.
Image: Bigstock
Federated (FII) Q3 Earnings Beat Estimates, AUM Goes Up
Federated Investors, Inc. reported positive earnings surprise of 9.3% in third-quarter 2018. Earnings per share of 59 cents surpassed the Zacks Consensus Estimate of 54 cents. Moreover, the figure compares favorably with the prior-year quarter earnings of 56 cents.
Higher revenues and improved assets under management (AUM) were positives. Notably, completion of acquisition of Hermes Fund Managers Limited (Hermes), beginning Jul 1, 2018, positively drove the results. However, elevated expenses were an undermining factor.
Net income for the reported quarter came in at $59.6 million compared with $56.4 million in the year-ago quarter.
Uptrend in Revenues, Costs Escalate
Total revenues in the third quarter climbed 11% year over year to $308.6 million. Additionally, the revenue figure outpaced the Zacks Consensus Estimate of $283 million.
The year-over-year upswing in revenues mainly stemmed from the consolidation of Hermes' revenues, partly countered by the adoption of new revenue-recognition accounting principle. Further, higher voluntary fee waivers for certain money market funds for competitive purposes unfavorably impacted revenues.
Also, net investment advisory fees jumped 17% year over year to $217 million. In addition, administrative service fees were up 5% year over year to $49.9 million. However, net service fees (other) marked a 9% decline, amounting to $41.7 million.
During the quarter under review, Federated derived 33% of its revenues from money market assets, 66% from equity and fixed-income assets, and remaining 1% from sources other than managed assets.
Furthermore, due to fall in net investment income and higher debt expenses, the company recorded non-operating income of $1.8 million in the quarter, down 20% year over year.
Total operating expenses escalated 20% year over year to $226.7 million. The rise was primarily due to the consolidation of Hermes' expenses, partly offset by drop in distribution expenses associated with change in average money-market fund assets mix and the adoption of the new revenue-recognition accounting standard.
Steady Asset Position
As of Sep 30, 2018, total AUM was a record $437.2 billion — up 20% year over year. Average managed assets were $433.9 billion, up 20% from the prior-year quarter.
Federated witnessed equity assets of $84.1 billion, up 36% year over year. Also, money market mutual fund assets came in at $183 billion, up 3% year over year.
Further, fixed-income assets grew 24% year over year to $65.4 billion. Additionally, money-market assets increased 8% year over year to $264.2 billion.
As of Sep 30, 2018, cash and other investments were $157.1 million and total long-term debt totaled $160 million, compared with $369.5 million and $170 million, respectively, as of Dec 31, 2017.
Capital Deployment Update
During the Sep-end quarter, the company repurchased 276,982 shares of Federated class B common stock, for $5.9 million.
Our Viewpoint
Federated displays substantial growth potential supported by its diverse asset and product mix, as well as a solid liquidity position. In addition, strategic acquisitions are anticipated to be favorable for the company. Moreover, higher revenues could aid the company’s bottom-line performance, moving ahead. Nonetheless, higher expenses remain a concern.
Federated Investors, Inc. Price, Consensus and EPS Surprise
Federated Investors, Inc. Price, Consensus and EPS Surprise | Federated Investors, Inc. Quote
Currently, Federated carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Blackstone (BX - Free Report) reported third-quarter 2018 economic net income (ENI) of 76 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. The figure also improved 12% from the prior-year quarter. Results benefited from increase in revenues, which was supported by growth in assets under management and inflows. However, rise in expenses was the undermining factor.
Invesco (IVZ - Free Report) reported adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny, in the Jul-Sep quarter. Also, the figure came in 7% lower than the prior-year tally. Results were primarily supported by slight GAAP revenue growth and a rise in AUM. However, flaring up operating expenses remained an undermining factor.
Ameriprise Financial Services (AMP - Free Report) came out with quarterly earnings of $3.74 per share, beating the Zacks Consensus Estimate of $3.61 for the recently-reported quarter. This compares to earnings of $3.53 per share a year ago. These figures are adjusted for non-recurring items. The quarterly report represents an earnings surprise of 3.60%.
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 >>