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Eaton Vance (EV) Q1 Earnings Beat Estimates, AUM Increases

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Shares of Eaton Vance Corp.’s rallied 1.7%, following the release of first-quarter fiscal 2021 (ended Jan 31) results. Adjusted earnings of 94 cents per share outpaced the Zacks Consensus Estimate of 84 cents in the reported quarter. Moreover, the bottom line compares favorably with the prior-year quarter’s 85 cents.

Results benefited from rise in revenues and improved assets under management (AUM) balance. However, higher operating expenses was a headwind.

Net income attributable to shareholders (GAAP basis) came in at $89.1 million or 74 cents per share compared with $104 million or 91 cents recorded in the prior-year quarter.

Revenues Climb, Expenses Increase (GAAP basis)

Net revenues for the reported quarter were $488.9 million, up 8% from the year-ago quarter. The bottom line also outpaced the Zacks Consensus Estimate of $458 million.  This upswing was primarily driven by higher performance-based, distribution and service fee and management fees, partly offset by a marginal fall in the company’s consolidated average annualized management fee rate.

Operating expenses of $409.4 million flared up 29% from the first quarter of fiscal 2020. Higher total employee compensation, service fees, amortization of deferred sales commissions, fund-related and other operating expenses were partly offset by decline in distribution expense.

Operating income came in at $79.5 million, plummeting 40% year over year.

While, operating margin was 16.3%, down from the year-earlier quarter’s 29.8%.

Liquidity Position Strong, AUM Balance Improves

As of Jan 31, 2021, Eaton Vance had $606.1 million in cash and cash equivalents compared with $544.1 million on Jan 31, 2020. Its investments included $20.4 million short-term debt securities and there were no borrowings outstanding under the $300-million credit facility.

Eaton Vance’s consolidated AUM rose 13% year over year to $584.2 billion as of Jan 31, 2021. For the fiscal first quarter, the company recorded market price appreciation of $45.1 billion, net inflows of $18.6 billion and new managed assets of $2.3 billion from the acquisition of business assets of WaterOak Advisors, LLC in October 2020.

Our Viewpoint

Despite the economic disruptions, Eaton Vance is likely to register growth in revenues on a solid AUM balance, diverse product offerings and impressive capital-deployment activities. Though elevated operated expenses are a near-term concern, we believe the bank’s global footprint will keep fueling growth.

Eaton Vance Corporation Price, Consensus and EPS Surprise

Eaton Vance Corporation Price, Consensus and EPS Surprise

Eaton Vance Corporation price-consensus-eps-surprise-chart | Eaton Vance Corporation Quote

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 Asset Managers

Cohen & Steers’ (CNS - Free Report) fourth-quarter 2020 adjusted earnings of 76 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Moreover, the bottom line was significantly lower than the year-ago reported figure.

Invesco (IVZ - Free Report) reported fourth-quarter 2020 adjusted earnings of 72 cents per share, topping the Zacks Consensus Estimate of 57 cents. Additionally, the bottom line increased 17% from the prior-year quarter.

BlackRock, Inc. (BLK - Free Report) reported fourth-quarter 2020 adjusted earnings of $10.18 per share, surpassing Zacks Consensus Estimate of $8.84. Moreover, the bottom line witnessed a 19% gain from the prior-year quarter.

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