Shares of Waddell & Reed Financial, Inc. (WDR - Free Report) hit a new 52-week high, touching $65.18 at the end of the trading session on Nov 13. However, the stock closed the session at $65.16, which reflects a solid year-to-date return of 85.1%.The trading volume for the session was 0.5 million shares.
Despite the strong price appreciation, this Zacks Rank #1 (Strong Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days and expected long-term earnings growth of 18.10%.
Impressive third-quarter 2013 results comprising a positive earnings surprise of 11.11% and growth in revenues, together with a strong balance sheet were the key driving factors for Waddell & Reed.
On Oct 29, Waddell & Reed reported third-quarter 2013 earnings of 80 cents per share, outpacing the Zacks Consensus Estimate of 72 cents. Further, earnings surpassed the prior-year quarter figure of 61 cents.
A year-over-year increase of 18.2% in revenues, 24.8% in gross sales and 78.6% in net inflows were the tailwinds for the quarter. The company’s strong balance sheet was another positive. However, 14.2% year-over-year rise in expenses, due to higher underwriting and distribution expenses, compensation and related costs as well as general and administrative costs, was the headwind.
Further, Waddell & Reed has delivered positive earnings surprises in the past 4 quarters with an average beat of 5.65%.
Estimate Revisions Show Potency
Over the last 30 days, 5 out of 6 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate by 1.8% to $2.77 per share. For 2014, 7 out of 8 estimates moved north, helping the Zacks Consensus Estimate advance 5.9% to $3.42 per share.
Other better performing investment management firms include Brookfield Asset Management Inc. , GAMCO Investors, Inc. and Artisan Partners Asset Management Inc. (APAM - Free Report) . All these stocks carry the same Zacks Rank as Waddell & Reed.