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Why Is Cohen & Steers (CNS) Up 3% Since Last Earnings Report?

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It has been about a month since the last earnings report for Cohen & Steers (CNS - Free Report) . Shares have added about 3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cohen & Steers due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Cohen & Steers' Q3 Earnings Beat Estimates, Costs Rise

Cohen & Steers’ third-quarter 2018 adjusted earnings came in at 64 cents per share, surpassing the Zacks Consensus Estimate of 62 cents. Earnings were 9.1% higher than the year-ago quarter tally.

Revenues witnessed an increase, which was more than offset by higher operating expenses. This resulted in a drop in operating income on a year-over-year basis. AUM also declined during the quarter.

Net income available to common stockholders (GAAP basis) was $30.8 million, up 22.8% from the prior-year quarter.

Revenue Growth Offset by Elevated Expenses

The company’s quarterly revenues (GAAP basis) came in at $98.3 million, up 1.6% from the year-ago quarter on an increase in investment advisory and administration fees.  

Total expenses (GAAP basis) amounted to $59.1 million, up 5.9% year over year on rise in employee compensation and benefits expenses.

Operating income (GAAP basis) came in at $39.2 million, down 4.3% year over year.


AUM & Inflows

As of Sep 30, 2018, AUM was $60.1 billion, down 2.3% from the year-earlier quarter. Notably, the company witnessed long-term net outflows of $76 million in the reported quarter against inflows of $1,395 million in the prior-year quarter.

Also, average AUM for the July-September quarter totaled $60.4 billion, down 1.4% from the comparable period last year.

Outlook

Management expects G&A expenses in the fourth quarter 2018 to increase 2% sequentially.

Compensation to revenue ratio is expected to be 33.75% in the fourth quarter 2018.

Management expects effective tax rate to be 25.25% in the fourth quarter 2018.

Non-US open-end funds are expected to witness increasing flows in the upcoming quarters as the benefits of expanded bond share classes, new registrations, and additional selling agreements gain traction.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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