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Eaton Vance (EV) Down 13.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Eaton Vance (EV - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Eaton Vance due for a breakout? 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 catalysts.
Eaton Vance Q3 Earnings Beat, AUM Balance Rise
Eaton Vance’s third-quarter fiscal 2020 (ended Jul 31) adjusted earnings of 82 cents per share outpaced the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 7% year over year.
The results were driven by lower expenses and a rise in assets under management (AUM) balance. However, fall in revenues was an undermining factor.
Net loss attributable to shareholders (GAAP basis) was $1.6 million or 1 cent per share versus net income of $102.2 million or 90 cents per share in the prior year.
Revenues Down, Expenses Fall
Total revenues were $420.8 million, down 2% year over year. Fall in management fees and performance fees were the main reasons for lower revenues. However, revenues beat the Zacks Consensus Estimate of $403.2 million.
Total expenses decreased 2% from the prior-year quarter to $289.6 million. Lower compensation and related costs, fund-related expenses and distribution expenses were partially offset by higher service fee expense, amortization of deferred sales commissions, and other expenses.
Total operating income slid 4% year over year to $131.2 million.
Liquidity Position Strong, AUM Balance Up
As of Jul 31, 2020, Eaton Vance had $878.9 million in cash and cash equivalents compared with $557.7 million on Oct 31, 2019. The company had no borrowings outstanding under the $300-million credit facility.
Eaton Vance’s consolidated AUM rose 5% year over year to $507.4 billion as of Jul 31, 2020. The company recorded market price appreciation and net inflows.
Share Repurchase Update
During the first nine months of fiscal 2020, Eaton Vance repurchased and retired nearly 2.4 million shares of its Non-Voting Common Stock for $98.9 million under the company’s existing repurchase authorization.
Outlook
The effective tax rate for fiscal 2020 is expected between 26.4% and 26.9%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.34% due to these changes.
VGM Scores
Currently, Eaton Vance has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Eaton Vance has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Eaton Vance (EV) Down 13.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Eaton Vance (EV - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Eaton Vance due for a breakout? 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 catalysts.
Eaton Vance Q3 Earnings Beat, AUM Balance Rise
Eaton Vance’s third-quarter fiscal 2020 (ended Jul 31) adjusted earnings of 82 cents per share outpaced the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 7% year over year.
The results were driven by lower expenses and a rise in assets under management (AUM) balance. However, fall in revenues was an undermining factor.
Net loss attributable to shareholders (GAAP basis) was $1.6 million or 1 cent per share versus net income of $102.2 million or 90 cents per share in the prior year.
Revenues Down, Expenses Fall
Total revenues were $420.8 million, down 2% year over year. Fall in management fees and performance fees were the main reasons for lower revenues. However, revenues beat the Zacks Consensus Estimate of $403.2 million.
Total expenses decreased 2% from the prior-year quarter to $289.6 million. Lower compensation and related costs, fund-related expenses and distribution expenses were partially offset by higher service fee expense, amortization of deferred sales commissions, and other expenses.
Total operating income slid 4% year over year to $131.2 million.
Liquidity Position Strong, AUM Balance Up
As of Jul 31, 2020, Eaton Vance had $878.9 million in cash and cash equivalents compared with $557.7 million on Oct 31, 2019. The company had no borrowings outstanding under the $300-million credit facility.
Eaton Vance’s consolidated AUM rose 5% year over year to $507.4 billion as of Jul 31, 2020. The company recorded market price appreciation and net inflows.
Share Repurchase Update
During the first nine months of fiscal 2020, Eaton Vance repurchased and retired nearly 2.4 million shares of its Non-Voting Common Stock for $98.9 million under the company’s existing repurchase authorization.
Outlook
The effective tax rate for fiscal 2020 is expected between 26.4% and 26.9%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.34% due to these changes.
VGM Scores
Currently, Eaton Vance has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Eaton Vance has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.