Back to top

Image: Bigstock

Eaton Vance (EV) Stock Gains 1% Despite Q1 Earnings Lag

Read MoreHide Full Article

Eaton Vance Corp.’s (EV - Free Report) first-quarter fiscal 2019 (ended Jan 31) adjusted earnings of 73 cents per share lagged the Zacks Consensus Estimate of 74 cents. Moreover, the bottom line was 6% lower than the prior-year quarter level.

Results were hurt by a decline in revenues and marginally higher expenses. Moreover, decrease in assets under management (AUM) on a year-over-year basis was a headwind for the company. However, its liquidity position remained strong. Despite the negatives, shares of the company gained nearly 1% following the release.

Net income attributable to shareholders (GAAP basis) was $86.8 million or 75 cents per share, up from $78.1 million or 63 cents per share in the year-ago quarter.

Revenues Decline, Expenses Rise Marginally

Total revenues in the reported quarter were $406.4 million, down 3% year over year. The decline was due to fall in all revenue components except for other revenues. Moreover, the top line missed the Zacks Consensus Estimate of $422.9 million.

Total expenses increased marginally from the prior-year quarter to $285.3 million, largely due to higher amortization of deferred sales commissions as well as other expenses.

Total operating income declined 11% year over year to $121.1 million.

Liquidity Position Strong, AUM Decreases

As of Jan 31, 2019, Eaton Vance had $449.2 million in cash and cash equivalents compared with $600.7 million on Oct 31, 2018. The company had no borrowings outstanding against its $300-million credit facility.

Eaton Vance’s consolidated AUM decreased 1% year over year to $444.7 billion as of Jan 31, 2019. The reported quarter witnessed net inflows of $1.5 billion.

Share Repurchases

During first-quarter fiscal 2019, Eaton Vance repurchased and retired nearly 3.1 million shares of its Non-Voting Common Stock for $115 million under the company’s existing repurchase authorization.

Our Viewpoint

Eaton Vance’s improving AUM along with revenue rise will likely support growth in the quarters ahead. Also, the company's impressive capital deployment plan reflects a strong balance sheet position. However, escalating expenses remain a major headwind as the same might hamper its bottom-line growth to quite an extent.

Currently, Eaton Vance carries a Zacks Rank #2 (Buy). 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) fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the bottom line was 2% lower than the year-ago figure.

The Blackstone Group L.P. (BX - Free Report) reported fourth-quarter 2018 net loss of 2 cents per unit. The Zacks Consensus Estimate for earnings was pegged at 3 cents. Also, the figure reflects deterioration from 45 cents earned in the prior-year quarter.

Invesco Ltd. (IVZ - Free Report) reported fourth-quarter 2018 adjusted earnings of 44 cents per share, lagging the Zacks Consensus Estimate of 56 cents. Also, the figure was 39.7% below the prior-year quarter level.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>

Published in