We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The investment management industry (part of the broader Finance sector) has performed decently over the past several quarters. However, regulatory issues and macro uncertainties have created a tough backdrop for the traditional asset managers. Notably, the Apr–Jun 2016 quarter witnessed elevated volatility which was mostly fueled by the Brexit vote.
Equity markets revealed mixed results during the second-quarter 2016. In the U.S. markets, the S&P 500 was up 1.7%, while in international equity markets, MSCI EAFE index was down 1.5% at the end of quarter, both on a year-over-year basis.
Given such a backdrop, we expect overall industry flows to exhibit subdued growth, with flows into fixed income products increasing, and equity flows trending downwards.
Regarding the performance of the Business Development Companies (BDCs), we do not expect an impressive quarter as the middle market deal environment remains highly competitive. Also several BDCs continue to struggle with portfolio losses and challenges in origination of required yields for covering dividend. However, the stabilizing oil prices can act as a positive for BDCs having exposure in energy sector.
Per the latest Zacks Earnings Preview report, for the second-quarter 2016, overall earnings of the S&P 500 stocks in the Finance sector are expected to be down 5.3% year over year. This compares with a 6.9% decline in earnings in the previous quarter. Revenues are expected to decline 0.4% as against a 2.7% increase in the prior quarter.
Our quantitative model offers some insights into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key criteria, a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage of difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Let’s see what’s in store for the following companies that are scheduled to report second-quarter results in the coming days.
Ares Management, L.P. (ARES - Free Report) : The Zacks Consensus Estimate of 26 cents for the company reflects a year-over-year decrease of nearly 18%. While estimates remained unchanged ahead of the company’s release of second-quarter results on Tuesday, Aug 9, we are not confident of an earnings beat as the company has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 0.00%.
Notably, the company reported an average negative earnings surprise of 68.6% in the trailing four quarters.
Medley Capital Corporation : The company is set to release second-quarter results on Thursday, Aug 11. Estimates have been stable ahead of the company’s earnings release. The Zacks Consensus Estimate of 26 cents for the company reflects a year-over-year decline of 14.7%.
Notably, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter. Though Zacks Rank #3 increases the predictive power of our model, we also need a positive Earnings ESP to be sure of an earnings beat.
The company reported an average negative earnings surprise of 4.2% in the trailing four quarters.
Real Industry, Inc. (RELY - Free Report) : The company is expected to record a loss in the second quarter. The Zacks Consensus Estimate stands at a loss of 11 cents.
Estimates have been stable lately, ahead of the release of the company’s quarterly results on Aug 9. However, the combination of a Zacks Rank #3 with an Earnings ESP of 0.00% makes prediction difficult for this company as well.
Notably, the company reported an average negative earnings surprise of 29.9% in the trailing four quarters.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Investment Managers' Q2 Earnings Queued Up: ARES, MCC, RELY
The investment management industry (part of the broader Finance sector) has performed decently over the past several quarters. However, regulatory issues and macro uncertainties have created a tough backdrop for the traditional asset managers. Notably, the Apr–Jun 2016 quarter witnessed elevated volatility which was mostly fueled by the Brexit vote.
Equity markets revealed mixed results during the second-quarter 2016. In the U.S. markets, the S&P 500 was up 1.7%, while in international equity markets, MSCI EAFE index was down 1.5% at the end of quarter, both on a year-over-year basis.
Given such a backdrop, we expect overall industry flows to exhibit subdued growth, with flows into fixed income products increasing, and equity flows trending downwards.
Regarding the performance of the Business Development Companies (BDCs), we do not expect an impressive quarter as the middle market deal environment remains highly competitive. Also several BDCs continue to struggle with portfolio losses and challenges in origination of required yields for covering dividend. However, the stabilizing oil prices can act as a positive for BDCs having exposure in energy sector.
Per the latest Zacks Earnings Preview report, for the second-quarter 2016, overall earnings of the S&P 500 stocks in the Finance sector are expected to be down 5.3% year over year. This compares with a 6.9% decline in earnings in the previous quarter. Revenues are expected to decline 0.4% as against a 2.7% increase in the prior quarter.
Our quantitative model offers some insights into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key criteria, a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage of difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Let’s see what’s in store for the following companies that are scheduled to report second-quarter results in the coming days.
Ares Management, L.P. (ARES - Free Report) : The Zacks Consensus Estimate of 26 cents for the company reflects a year-over-year decrease of nearly 18%. While estimates remained unchanged ahead of the company’s release of second-quarter results on Tuesday, Aug 9, we are not confident of an earnings beat as the company has a Zacks Rank #5 (Strong Sell) with an Earnings ESP of 0.00%.
Notably, the company reported an average negative earnings surprise of 68.6% in the trailing four quarters.
ARES MANAGEMENT Price and EPS Surprise
ARES MANAGEMENT Price and EPS Surprise | ARES MANAGEMENT Quote
Medley Capital Corporation : The company is set to release second-quarter results on Thursday, Aug 11. Estimates have been stable ahead of the company’s earnings release. The Zacks Consensus Estimate of 26 cents for the company reflects a year-over-year decline of 14.7%.
Notably, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter. Though Zacks Rank #3 increases the predictive power of our model, we also need a positive Earnings ESP to be sure of an earnings beat.
The company reported an average negative earnings surprise of 4.2% in the trailing four quarters.
MEDLEY CAPITAL Price and EPS Surprise
MEDLEY CAPITAL Price and EPS Surprise | MEDLEY CAPITAL Quote
Real Industry, Inc. (RELY - Free Report) : The company is expected to record a loss in the second quarter. The Zacks Consensus Estimate stands at a loss of 11 cents.
Estimates have been stable lately, ahead of the release of the company’s quarterly results on Aug 9. However, the combination of a Zacks Rank #3 with an Earnings ESP of 0.00% makes prediction difficult for this company as well.
Notably, the company reported an average negative earnings surprise of 29.9% in the trailing four quarters.
REAL INDUSTRY Price and EPS Surprise
REAL INDUSTRY Price and EPS Surprise | REAL INDUSTRY Quote
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>