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Asset Growth Likely to Support Invesco (IVZ) in Q2 Earnings

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Invesco (IVZ - Free Report) is scheduled to report second-quarter 2021 results on Jul 27, before market open. While its earnings are expected to have witnessed a rise in the to-be-reported quarter, revenues are projected to have declined on a year-over-year basis.

In the last reported quarter, the company’s adjusted earnings beat the Zacks Consensus Estimate. Results reflected an improvement in revenues and solid growth in assets under management (AUM) balance.

Invesco has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with a beat of 7.4%, on average.

Invesco Ltd. Price and EPS Surprise

 

Invesco Ltd. Price and EPS Surprise

Invesco Ltd. price-eps-surprise | Invesco Ltd. Quote

The Zacks Consensus Estimate for Invesco’s second-quarter earnings is pegged at 71 cents, which has been unchanged over the past seven days. The figure indicates a jump of 102.9% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $1.31 billion, which suggests a year-over-year decline of 8%.

Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to have influenced Invesco’s second-quarter performance.

Per the monthly metrics data published by Invesco, preliminary total AUM as of Jun 30, 2021, was $1,525 billion, up 8.6% from the Mar 31, 2021 level. The sequential rise was mainly driven by net inflows and upbeat markets.

Thus, supported by growth in assets, the company’s investment management fee is expected to have been positively impacted. The Zacks Consensus Estimate for the same is pegged at $1.45 billion, indicating 20% growth from the prior quarter’s reported number.

The consensus estimate for service and distribution fees of $407 million indicates a 6.8% sequential rise. Likewise, the consensus estimate for performance fees of $8.20 million reflects a rise of 22.4%.

The Zacks Consensus Estimate for other revenues is pegged at $65 million, indicating no change from the previous quarter.

On the cost front, while Invesco’s initiatives to manage costs have helped in improving its efficiency, the continued rise in compensation and marketing costs has led to an increase in overall expenses over the past few years. The same trend is expected to have continued in the second quarter as well.

However, on the assumption of no change in markets and foreign exchange levels from Mar 31, 2021, management anticipates operating expenses to be relatively stable on a sequential basis.

What Our Model Predicts

Per the Zacks model, it cannot be conclusively predicted whether Invesco will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Invesco is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Finance Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

The Earnings ESP for Prosperity Bancshares (PB - Free Report) is +1.52% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report quarterly numbers on Jul 28.

Evercore Inc. (EVR - Free Report) is also scheduled to release earnings on Jul 28. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +4.84%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

T. Rowe Price Group (TROW - Free Report) is scheduled to release earnings on Jul 29. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.34%.