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Invesco (IVZ) Up 10% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Invesco (IVZ - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Invesco due for a pullback? 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 Q3 Earnings Miss Estimates, AUM Balance Up
Invesco’s third-quarter 2023 adjusted earnings of 35 cents per share lagged the Zacks Consensus Estimate of 36 cents. The bottom line, however, rose 2.9% from the prior-year quarter.
Results were hurt by a rise in operating expenses and lower revenues. Nevertheless, an increase in AUM balance on decent inflows aided the results to some extent.
On a GAAP basis, net income attributable to common shareholders was $131.4 million or 29 cents per share, down from $177.4 million or 39 cents per share a year ago. Our estimate for net income was $153.8 million.
Revenues Decline, Expenses Rise
Adjusted quarterly net revenues were $1.1 billion, falling 1.1% year over year. The top line marginally beat the Zacks Consensus Estimate of $1.09 billion.
Adjusted operating expenses were $789 million, up 6.4% year over year. We expected the metric to be $777.8 million.
The adjusted operating margin was 28.2%, down from 33.3% a year ago.
AUM Balance Increases
As of Sep 30, 2023, AUM was $1.49 trillion, which increased 12.4% year over year. Average AUM at the third-quarter end totaled $1.53 trillion, up 7.9%. Our estimates for total AUM and average AUM were $1.56 trillion and $1.55 trillion, respectively.
The company witnessed long-term net inflows of $2.6 billion in the quarter.
Balance Sheet Strong
As of Sep 30, 2023, cash and cash equivalents were $1.24 billion compared with $1.01 billion as of Jun 30, 2023.
Long-term debt was $1.49 billion. The credit facility balance was nil as of Sep 30, 2023.
Outlook
The company expects the compensation to net revenue ratio to be slightly above the higher end of the 38-42% range for 2023.
In the fourth quarter of 2023, the company expects to incur an incremental $15-$20 million in restructuring expenses associated with its simplification efforts, bringing the total expense associated with the efforts to $55-$60 million.
Invesco expects $50 million of annual run-rate expense savings to be recognized by the beginning of 2024.
In the third quarter, there was $8 million in spending on the company’s Alpha platform. Invesco expects the quarterly average spending on the Alpha platform to remain near this level for the next few quarters.
For the fourth quarter of 2023, the non-GAAP effective tax rate is expected to be 23-25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.22% due to these changes.
VGM Scores
Currently, Invesco has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Invesco is part of the Zacks Financial - Investment Management industry. Over the past month, BlackRock (BLK - Free Report) , a stock from the same industry, has gained 19.5%. The company reported its results for the quarter ended September 2023 more than a month ago.
BlackRock reported revenues of $4.52 billion in the last reported quarter, representing a year-over-year change of +4.9%. EPS of $10.91 for the same period compares with $9.55 a year ago.
BlackRock is expected to post earnings of $8.73 per share for the current quarter, representing a year-over-year change of -2.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.
BlackRock has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Invesco (IVZ) Up 10% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Invesco (IVZ - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Invesco due for a pullback? 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 Q3 Earnings Miss Estimates, AUM Balance Up
Invesco’s third-quarter 2023 adjusted earnings of 35 cents per share lagged the Zacks Consensus Estimate of 36 cents. The bottom line, however, rose 2.9% from the prior-year quarter.
Results were hurt by a rise in operating expenses and lower revenues. Nevertheless, an increase in AUM balance on decent inflows aided the results to some extent.
On a GAAP basis, net income attributable to common shareholders was $131.4 million or 29 cents per share, down from $177.4 million or 39 cents per share a year ago. Our estimate for net income was $153.8 million.
Revenues Decline, Expenses Rise
Adjusted quarterly net revenues were $1.1 billion, falling 1.1% year over year. The top line marginally beat the Zacks Consensus Estimate of $1.09 billion.
Adjusted operating expenses were $789 million, up 6.4% year over year. We expected the metric to be $777.8 million.
The adjusted operating margin was 28.2%, down from 33.3% a year ago.
AUM Balance Increases
As of Sep 30, 2023, AUM was $1.49 trillion, which increased 12.4% year over year. Average AUM at the third-quarter end totaled $1.53 trillion, up 7.9%. Our estimates for total AUM and average AUM were $1.56 trillion and $1.55 trillion, respectively.
The company witnessed long-term net inflows of $2.6 billion in the quarter.
Balance Sheet Strong
As of Sep 30, 2023, cash and cash equivalents were $1.24 billion compared with $1.01 billion as of Jun 30, 2023.
Long-term debt was $1.49 billion. The credit facility balance was nil as of Sep 30, 2023.
Outlook
The company expects the compensation to net revenue ratio to be slightly above the higher end of the 38-42% range for 2023.
In the fourth quarter of 2023, the company expects to incur an incremental $15-$20 million in restructuring expenses associated with its simplification efforts, bringing the total expense associated with the efforts to $55-$60 million.
Invesco expects $50 million of annual run-rate expense savings to be recognized by the beginning of 2024.
In the third quarter, there was $8 million in spending on the company’s Alpha platform. Invesco expects the quarterly average spending on the Alpha platform to remain near this level for the next few quarters.
For the fourth quarter of 2023, the non-GAAP effective tax rate is expected to be 23-25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.22% due to these changes.
VGM Scores
Currently, Invesco has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Invesco is part of the Zacks Financial - Investment Management industry. Over the past month, BlackRock (BLK - Free Report) , a stock from the same industry, has gained 19.5%. The company reported its results for the quarter ended September 2023 more than a month ago.
BlackRock reported revenues of $4.52 billion in the last reported quarter, representing a year-over-year change of +4.9%. EPS of $10.91 for the same period compares with $9.55 a year ago.
BlackRock is expected to post earnings of $8.73 per share for the current quarter, representing a year-over-year change of -2.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.
BlackRock has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.