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Invesco (IVZ) Down 0.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Invesco (IVZ - Free Report) . Shares have lost about 0.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Invesco 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.
Invesco Q4 Earnings Beat Estimates, Revenues & AUM Up
Invesco's fourth-quarter 2021 adjusted earnings of 86 cents per share handily outpaced the Zacks Consensus Estimate of 76 cents. The bottom line grew 19.4% from the prior-year quarter.
Results reflect improvement in revenues and solid growth in AUM balance. However, a rise in operating expenses was a headwind.
On a GAAP basis, net income attributable to common shareholders was $426.8 million or 92 cents per share, up from $211.1 million or 46 cents per share a year ago.
In 2021, adjusted earnings per share of $3.09 beat the consensus estimate of $3.01 and surged 60.1% year over year. Net income attributable to common shareholders (GAAP basis) was $1.39 billion or $2.99 per share, up from $524.8 million or $1.13 per share in 2020.
Revenues & Expenses Rise
Quarterly GAAP operating revenues were $1.76 billion, growing 8.2% year over year. The top line easily beat the Zacks Consensus Estimate of $1.35 billion. Adjusted net revenues increased 11.8% to $1.37 billion.
In 2021, GAAP operating revenues rose 12.2% to $6.89 billion. The top line also surpassed the consensus estimate of $5.24 billion. Adjusted net revenues grew 16.9% to $5.26 billion.
Adjusted operating expenses were $796.2 million, up 7.2% from the prior-year quarter.
Adjusted operating margin was 42%, up from 39.5% a year ago.
AUM Balance Improves
As of Dec 31, 2021, AUM was $1.61 trillion, which soared 19.3% year over year. Average AUM at fourth-quarter end totaled $1.58 trillion, up 23.8%.
The company witnessed long-term net inflows of $12.5 billion during the quarter, up from $8.4 billion in the prior-year period.
Strong Balance Sheet
As of Dec 31, 2021, cash and cash equivalents were $1.90 billion, up 6.9% sequentially. Further, long-term debt amounted to $2.09 billion.
As of Dec 31, 2021, the credit facility balance was zero.
Outlook
Management expects total net savings related to its cost-saving program of $200 million by 2022-end. Of this, $167 million or 84% has already been achieved (exceeding the $150 million target set for 2021). The remaining savings will be realized by 2022-end.
Notably, of the total cost savings of $200 million, 65% will be from compensation and 35% will be spread across property, property office technology and G&A expenses.
Total one-time transaction costs for the realization of the cost-saving program are projected to be $250-$275 million. Of this, $220 million have already been incurred. The company expects the remaining transaction costs of $30-$55 million to be incurred through the end of 2022.
In first-quarter 2022, a $25-$30 million sequential increase in compensation expenses has been anticipated. This relates to the seasonal increase in payroll taxes and the reset of other benefits, such as the 401k plan match.
Given the current prospects of a few rate hikes in 2022, the company expects 75-90% of the discretionary money market fee waivers to cease within the first 60-90 days after the first hike. This might result in a recovery of four-tenths to 5 cents per share of the negative impact that fee waivers have had on Invesco’s annualized net revenue yield.
For the first quarter, the non-GAAP effective tax rate is expected to be 23-24%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Invesco has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 has been net zero. Notably, Invesco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Invesco (IVZ) Down 0.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Invesco (IVZ - Free Report) . Shares have lost about 0.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Invesco 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.
Invesco Q4 Earnings Beat Estimates, Revenues & AUM Up
Invesco's fourth-quarter 2021 adjusted earnings of 86 cents per share handily outpaced the Zacks Consensus Estimate of 76 cents. The bottom line grew 19.4% from the prior-year quarter.
Results reflect improvement in revenues and solid growth in AUM balance. However, a rise in operating expenses was a headwind.
On a GAAP basis, net income attributable to common shareholders was $426.8 million or 92 cents per share, up from $211.1 million or 46 cents per share a year ago.
In 2021, adjusted earnings per share of $3.09 beat the consensus estimate of $3.01 and surged 60.1% year over year. Net income attributable to common shareholders (GAAP basis) was $1.39 billion or $2.99 per share, up from $524.8 million or $1.13 per share in 2020.
Revenues & Expenses Rise
Quarterly GAAP operating revenues were $1.76 billion, growing 8.2% year over year. The top line easily beat the Zacks Consensus Estimate of $1.35 billion. Adjusted net revenues increased 11.8% to $1.37 billion.
In 2021, GAAP operating revenues rose 12.2% to $6.89 billion. The top line also surpassed the consensus estimate of $5.24 billion. Adjusted net revenues grew 16.9% to $5.26 billion.
Adjusted operating expenses were $796.2 million, up 7.2% from the prior-year quarter.
Adjusted operating margin was 42%, up from 39.5% a year ago.
AUM Balance Improves
As of Dec 31, 2021, AUM was $1.61 trillion, which soared 19.3% year over year. Average AUM at fourth-quarter end totaled $1.58 trillion, up 23.8%.
The company witnessed long-term net inflows of $12.5 billion during the quarter, up from $8.4 billion in the prior-year period.
Strong Balance Sheet
As of Dec 31, 2021, cash and cash equivalents were $1.90 billion, up 6.9% sequentially. Further, long-term debt amounted to $2.09 billion.
As of Dec 31, 2021, the credit facility balance was zero.
Outlook
Management expects total net savings related to its cost-saving program of $200 million by 2022-end. Of this, $167 million or 84% has already been achieved (exceeding the $150 million target set for 2021). The remaining savings will be realized by 2022-end.
Notably, of the total cost savings of $200 million, 65% will be from compensation and 35% will be spread across property, property office technology and G&A expenses.
Total one-time transaction costs for the realization of the cost-saving program are projected to be $250-$275 million. Of this, $220 million have already been incurred. The company expects the remaining transaction costs of $30-$55 million to be incurred through the end of 2022.
In first-quarter 2022, a $25-$30 million sequential increase in compensation expenses has been anticipated. This relates to the seasonal increase in payroll taxes and the reset of other benefits, such as the 401k plan match.
Given the current prospects of a few rate hikes in 2022, the company expects 75-90% of the discretionary money market fee waivers to cease within the first 60-90 days after the first hike. This might result in a recovery of four-tenths to 5 cents per share of the negative impact that fee waivers have had on Invesco’s annualized net revenue yield.
For the first quarter, the non-GAAP effective tax rate is expected to be 23-24%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Invesco has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 has been net zero. Notably, Invesco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.