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Invesco (IVZ) Down 6.8% 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 6.8% in that time frame, underperforming 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 drivers.
Invesco Q2 Earnings Miss Estimates, Revenues Decline Y/Y
Invesco’s second-quarter 2023 adjusted earnings of 31 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line plunged 20.5% from the prior-year quarter.
Results have been hurt by a rise in operating expenses and lower revenues. Nevertheless, an increase in the AUM balance has aided the results to some extent.
On a GAAP basis, net income attributable to common shareholders was $132.2 million or 29 cents per share, up from $121 million or 26 cents per share a year ago. Our estimate for net income was $100.1 million.
Revenues Decline, Expenses Rise
Adjusted quarterly net revenues were $1.09 billion, falling 7.1% year over year. The top line missed the Zacks Consensus Estimate of $1.10 billion.
Adjusted operating expenses were $788.7 million, up 3.5% year over year. We expected the metric to be $765.9 million.
The adjusted operating margin was 27.7%, down from 35.1% a year ago.
AUM Balance Increases
As of Jun 30, 2023, AUM was $1.54 trillion, which increased 10.6% year over year. Average AUM at the second-quarter end totaled $1.49 trillion, up 2.6%. Our estimates for total AUM and average AUM were $1.52 trillion and $1.49 trillion, respectively.
The company witnessed long-term net outflows of $2 billion in the quarter.
Balance Sheet Strong
As of Jun 30, 2023, cash and cash equivalents were $1 billion compared with $889 million as of Mar 31, 2023.
Long-term debt was $1.49 billion. The credit facility balance was nil as of Jun 30, 2023.
Outlook
The company expects the compensation to net revenue ratio to be at or slightly above the higher end of the 38-42% range for 2023.
In the third quarter, the company will be incurring roughly $20 million of additional costs related to executive retirement. This is part of the company’s simplification process to position the firm for greater scale and profitability as it grows its revenue base.
Invesco expects $50 million of annual run-rate expense savings to be recognized by the beginning of 2024.
The company expects G&A expenses in the third quarter of 2023 to be flat to modestly down sequentially.
For the third quarter of 2023, the non-GAAP effective tax rate is expected to be 23-25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.83% due to these changes.
VGM Scores
At this time, Invesco has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Invesco has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Invesco (IVZ) Down 6.8% 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 6.8% in that time frame, underperforming 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 drivers.
Invesco Q2 Earnings Miss Estimates, Revenues Decline Y/Y
Invesco’s second-quarter 2023 adjusted earnings of 31 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line plunged 20.5% from the prior-year quarter.
Results have been hurt by a rise in operating expenses and lower revenues. Nevertheless, an increase in the AUM balance has aided the results to some extent.
On a GAAP basis, net income attributable to common shareholders was $132.2 million or 29 cents per share, up from $121 million or 26 cents per share a year ago. Our estimate for net income was $100.1 million.
Revenues Decline, Expenses Rise
Adjusted quarterly net revenues were $1.09 billion, falling 7.1% year over year. The top line missed the Zacks Consensus Estimate of $1.10 billion.
Adjusted operating expenses were $788.7 million, up 3.5% year over year. We expected the metric to be $765.9 million.
The adjusted operating margin was 27.7%, down from 35.1% a year ago.
AUM Balance Increases
As of Jun 30, 2023, AUM was $1.54 trillion, which increased 10.6% year over year. Average AUM at the second-quarter end totaled $1.49 trillion, up 2.6%. Our estimates for total AUM and average AUM were $1.52 trillion and $1.49 trillion, respectively.
The company witnessed long-term net outflows of $2 billion in the quarter.
Balance Sheet Strong
As of Jun 30, 2023, cash and cash equivalents were $1 billion compared with $889 million as of Mar 31, 2023.
Long-term debt was $1.49 billion. The credit facility balance was nil as of Jun 30, 2023.
Outlook
The company expects the compensation to net revenue ratio to be at or slightly above the higher end of the 38-42% range for 2023.
In the third quarter, the company will be incurring roughly $20 million of additional costs related to executive retirement. This is part of the company’s simplification process to position the firm for greater scale and profitability as it grows its revenue base.
Invesco expects $50 million of annual run-rate expense savings to be recognized by the beginning of 2024.
The company expects G&A expenses in the third quarter of 2023 to be flat to modestly down sequentially.
For the third quarter of 2023, the non-GAAP effective tax rate is expected to be 23-25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.83% due to these changes.
VGM Scores
At this time, Invesco has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Invesco has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.