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Waddell & Reed Financial Inc.’s third-quarter 2018 earnings of 58 cents per share outpaced the Zacks Consensus Estimate of 57 cents. Moreover, the figure compared favorably with the year-ago quarter’s earnings of 64 cents.
Results benefited from an improvement in revenues. Expenses remained unchanged year over year during the reported quarter. However, decline in assets under management (AUM) was a major headwind. Further, all distribution channels witnessed outflows. Probably because of these negatives, shares of the company have lost 3.2% following the release.
Net income attributable to Waddell & Reed totaled $46.3 million, down 13.6% from the prior-year quarter.
Operating revenues rose 2% year over year to $295.1 million, reflecting rise in underwriting and distribution fees. Moreover, the figure surpassed the Zacks Consensus Estimate of $293.8 million.
Gross sales decreased 11.7% year over year to $2.55 billion. Redemptions decreased 19.4% to $4.57 billion. However, net outflows were $2.03 billion at the end of the reported quarter, down from $2.79 billion at the end of the prior-year quarter.
Operating expenses remained relatively flat year over year at $235.6 million. Almost all expense components except for distribution costs, depreciation expenses and sub-advisory fees witnessed a decline.
Operating margin was 20.2%, up from 18.6% in the year-ago quarter.
As of Sep 30, 2018, AUM totaled $79.54 billion, down 1.7% year over year.
As of Sep 30, 2018, the company’s cash and cash equivalents, as well as investment securities, totaled $858.9 million. Long-term debt was $94.8 million and stockholders’ equity was $893.5 million.
Performance of Distribution Channels
At the Broker-Dealer channel, gross sales decreased 14.6% year over year to $874 million. Net outflows totaled $1.10 billion, decreasing from $1.24 billion in the year-ago quarter.
At the Unaffiliated Distribution channel, gross sales declined 11.2% year over year to $1.59 billion. However, net outflows were $476 million, decreasing from $483 million in the year-ago quarter.
Gross sales at the Institutional channel were $83 million, increasing 22.1% from the year-ago quarter. The segment witnessed net outflows of $452 million, down from $1.07 billion witnessed in the prior-year quarter.
Share Repurchases
Waddell & Reed bought back 1.4 billion shares for $28.4 million during the reported quarter.
Our Viewpoint
Muted growth in AUM is likely to hamper Waddell & Reed’s financials in the near term. Also, the presence of substantial intangibles on its balance sheet remains a cause of concern. Nevertheless, as the company is making efforts to improve efficiency and optimize operations, expenses are likely to trend lower in the next few quarters, thereby supporting bottom-line growth.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
BlackRock’s (BLK - Free Report) third-quarter 2018 adjusted earnings of $7.52 per share outpaced the Zacks Consensus Estimate of $6.93. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. The uptick in operating expenses was a dampening factor.
The Blackstone Group L.P. (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. Results benefited from increase in revenues, which was supported by growth in AUM and inflows.
Invesco Ltd. (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny. Results were primarily supported by slight revenue growth and rise in AUM. However, increase in operating expenses was an undermining factor.
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Waddell & Reed (WDR) Stock Falls Despite Q3 Earnings Beat
Waddell & Reed Financial Inc.’s third-quarter 2018 earnings of 58 cents per share outpaced the Zacks Consensus Estimate of 57 cents. Moreover, the figure compared favorably with the year-ago quarter’s earnings of 64 cents.
Results benefited from an improvement in revenues. Expenses remained unchanged year over year during the reported quarter. However, decline in assets under management (AUM) was a major headwind. Further, all distribution channels witnessed outflows. Probably because of these negatives, shares of the company have lost 3.2% following the release.
Net income attributable to Waddell & Reed totaled $46.3 million, down 13.6% from the prior-year quarter.
Revenues Improve & Expenses Remain Stable, AUM Falls
Operating revenues rose 2% year over year to $295.1 million, reflecting rise in underwriting and distribution fees. Moreover, the figure surpassed the Zacks Consensus Estimate of $293.8 million.
Gross sales decreased 11.7% year over year to $2.55 billion. Redemptions decreased 19.4% to $4.57 billion. However, net outflows were $2.03 billion at the end of the reported quarter, down from $2.79 billion at the end of the prior-year quarter.
Operating expenses remained relatively flat year over year at $235.6 million. Almost all expense components except for distribution costs, depreciation expenses and sub-advisory fees witnessed a decline.
Operating margin was 20.2%, up from 18.6% in the year-ago quarter.
As of Sep 30, 2018, AUM totaled $79.54 billion, down 1.7% year over year.
As of Sep 30, 2018, the company’s cash and cash equivalents, as well as investment securities, totaled $858.9 million. Long-term debt was $94.8 million and stockholders’ equity was $893.5 million.
Performance of Distribution Channels
At the Broker-Dealer channel, gross sales decreased 14.6% year over year to $874 million. Net outflows totaled $1.10 billion, decreasing from $1.24 billion in the year-ago quarter.
At the Unaffiliated Distribution channel, gross sales declined 11.2% year over year to $1.59 billion. However, net outflows were $476 million, decreasing from $483 million in the year-ago quarter.
Gross sales at the Institutional channel were $83 million, increasing 22.1% from the year-ago quarter. The segment witnessed net outflows of $452 million, down from $1.07 billion witnessed in the prior-year quarter.
Share Repurchases
Waddell & Reed bought back 1.4 billion shares for $28.4 million during the reported quarter.
Our Viewpoint
Muted growth in AUM is likely to hamper Waddell & Reed’s financials in the near term. Also, the presence of substantial intangibles on its balance sheet remains a cause of concern. Nevertheless, as the company is making efforts to improve efficiency and optimize operations, expenses are likely to trend lower in the next few quarters, thereby supporting bottom-line growth.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise | Waddell & Reed Financial, Inc. Quote
Waddell & Reed currently carries a Zacks Rank #3 (Hold). 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) third-quarter 2018 adjusted earnings of $7.52 per share outpaced the Zacks Consensus Estimate of $6.93. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. The uptick in operating expenses was a dampening factor.
The Blackstone Group L.P. (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. Results benefited from increase in revenues, which was supported by growth in AUM and inflows.
Invesco Ltd. (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny. Results were primarily supported by slight revenue growth and rise in AUM. However, increase in operating expenses was an undermining factor.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>