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Why is an Earnings Beat Less Likely for Invesco (IVZ) in Q2?

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Invesco (IVZ - Free Report) is slated to announce second-quarter 2022 results on Jul 27, before market open. Its earnings and revenues are expected to have witnessed declines in the to-be-reported quarter on a year-over-year basis.

In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate. Results were adversely impacted by a rise in operating expenses. However, improvement in revenues and solid growth in the assets under management (AUM) balance acted as tailwinds.

Invesco has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and lagged in one of the trailing four quarters, the beat being 5.1%, 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 52 cents, which has been unchanged over the past seven days. The figure indicates a decline of 33.3% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $1.22 billion, suggesting a year-over-year fall of 6.7%.

Other Key Estimates & Factors to Note for Q2

Per the monthly metrics data published by Invesco, its preliminary total AUM as of Jun 30, 2022, was $1,390.4 billion, down 10.6% from the Mar 31, 2022 level. While the second quarter recorded overall asset inflows, AUM is likely to have been negatively impacted by unfavorable market returns.

Despite the decline in the AUM balance, the company’s investment management fee is expected to have improved. The Zacks Consensus Estimate for the same is pegged at $1.23 billion, indicating an increase of 4.5% on a sequential basis.

The consensus estimate for performance fees of $8.25 million indicates a significant rise from the prior quarter. However, the consensus estimate for service and distribution fees of $373 million indicates a 1.6% sequential decline.

The Zacks Consensus Estimate for other revenues is pegged at $62 million, suggesting a fall of 10.1% from the prior quarter.

Management expects money market fee waivers of $5 million for the second quarter.

On the cost front, while Invesco’s cost-saving initiatives are likely to have boosted its efficiency, the steady rise in compensation and marketing costs is expected to have had an adverse impact on overall expenses in the quarter.

What Our Model Predicts

According to our proven model, the chances of Invesco beating the Zacks Consensus Estimate this time are low. 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 -2.89%.

Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).

Finance Stocks That Warrant a Look

A couple of finance stocks, which 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, are Raymond James Financial (RJF - Free Report) and LPL Financial (LPLA - Free Report) .

The Earnings ESP for RJF is +1.02%. Raymond James carries a Zacks Rank #3 at present. RJF is slated to report results on Jul 27.

LPL Financial is scheduled to release quarterly results on Aug 2. LPLA currently sports a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of +0.13%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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