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Janus Capital Group, Inc.’s stock declined 3.7%, as the company recorded a negative earnings surprise of 16.7% in its fourth-quarter 2016 results. The company reported adjusted earnings per share of 20 cents, lagging the Zacks Consensus Estimate of 24 cents.
A fall in revenues and higher expenses were primarily responsible for the lower-than-expected results. The company also recorded net long-term outflows in the quarter. However, an increase in average and total AUM (assets under management) was on the positive side.
Net income attributable to common shareholders came in at $29.8 million, down 33.8% year over year.
The company reported full-year adjusted earnings per share of 84 cents, which also lagged the Zacks Consensus Estimate of 87 cents. Moreover, the reported figure represents a decline of 8.7% from the prior-year. Also, net income attributable to common shareholders for 2016 came in at $140.6 million, down 6.5% year over year.
Total revenue for the quarter came in at $251.4 million, lagging the Zacks Consensus Estimate of $264.4 million. Also, the figure decreased 6.1% year over year, primarily due to lower investment management fees and shareowner servicing fees, and higher negative performance fees.
For 2016, total revenue was $1.01 billion, lagging the Zacks Consensus Estimate of $1.02 billion. Also, the reported figure compares unfavorably with the prior-year figure of $1.08 billion.
Total operating expenses for the quarter increased 1.4% on a year-over-year basis to $189.6 million. The rise was primarily due to an increase in all expense components except distribution expense, and depreciation and amortization related expenses.
Strong Asset Position
Average AUM for the quarter increased to $191.9 billion from $191.2 billion in the year-ago quarter. However, the figure was down from $195.6 billion recorded in the preceding quarter.
As of Dec 31, 2016, Janus Capital reported total AUM (Complex-Wide) of $196.8 billion, up from $192.3 billion as of Dec 31, 2015. However, the figure was down from $198.9 billion recorded as of Sep 30, 2016.
Notably, the reported quarter witnessed market depreciation of $0.2 billion along with long-term net outflows of $0.3 billion. This net outflow included mathematical equity net outflow of $1.6 billion, partially offset by fundamental equity and fixed income net inflows of $0.2 billion and $1.1 billion, respectively.
Stable Balance Sheet
As of Dec 31, 2016, Janus Capital had stockholders’ equity of $1.72 billion and outstanding debt of $406.3 million, compared with stockholders’ equity of $1.67 billion and outstanding debt of $402.3 million at the end of the prior year. Also, cash and investments as of Dec 31, 2016 was $795.7 million.
Cash flow from operations in the reported quarter was $94.5 million compared with $124 million in fourth-quarter 2015.
Our Viewpoint
Janus Capital’s strategic investment in diversification and acquisition is expected to aid in profitability growth in the long run. Also, the company remains well positioned for competitive leverage growth, given its best-in-class investment boutique with potential for AUM improvement.
However, its equity-heavy portfolio makes it vulnerable to equity market volatility. Further, continued negative performance fee will limit the company’s profitability.
Janus Capital Group, Inc Price, Consensus and EPS Surprise
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) and Invesco Ltd. (IVZ - Free Report) are slated to release their fourth-quarter 2016 results on Jan 26. Apollo Global Management, LLC (APO - Free Report) will report its quarterly numbers on Feb 3.
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Janus Capital's (JNS) Q4 Earnings Miss; Stock Declines 3.7%
Janus Capital Group, Inc.’s stock declined 3.7%, as the company recorded a negative earnings surprise of 16.7% in its fourth-quarter 2016 results. The company reported adjusted earnings per share of 20 cents, lagging the Zacks Consensus Estimate of 24 cents.
A fall in revenues and higher expenses were primarily responsible for the lower-than-expected results. The company also recorded net long-term outflows in the quarter. However, an increase in average and total AUM (assets under management) was on the positive side.
Net income attributable to common shareholders came in at $29.8 million, down 33.8% year over year.
The company reported full-year adjusted earnings per share of 84 cents, which also lagged the Zacks Consensus Estimate of 87 cents. Moreover, the reported figure represents a decline of 8.7% from the prior-year. Also, net income attributable to common shareholders for 2016 came in at $140.6 million, down 6.5% year over year.
Revenues Decline, Expenses Increase
Total revenue for the quarter came in at $251.4 million, lagging the Zacks Consensus Estimate of $264.4 million. Also, the figure decreased 6.1% year over year, primarily due to lower investment management fees and shareowner servicing fees, and higher negative performance fees.
For 2016, total revenue was $1.01 billion, lagging the Zacks Consensus Estimate of $1.02 billion. Also, the reported figure compares unfavorably with the prior-year figure of $1.08 billion.
Total operating expenses for the quarter increased 1.4% on a year-over-year basis to $189.6 million. The rise was primarily due to an increase in all expense components except distribution expense, and depreciation and amortization related expenses.
Strong Asset Position
Average AUM for the quarter increased to $191.9 billion from $191.2 billion in the year-ago quarter. However, the figure was down from $195.6 billion recorded in the preceding quarter.
As of Dec 31, 2016, Janus Capital reported total AUM (Complex-Wide) of $196.8 billion, up from $192.3 billion as of Dec 31, 2015. However, the figure was down from $198.9 billion recorded as of Sep 30, 2016.
Notably, the reported quarter witnessed market depreciation of $0.2 billion along with long-term net outflows of $0.3 billion. This net outflow included mathematical equity net outflow of $1.6 billion, partially offset by fundamental equity and fixed income net inflows of $0.2 billion and $1.1 billion, respectively.
Stable Balance Sheet
As of Dec 31, 2016, Janus Capital had stockholders’ equity of $1.72 billion and outstanding debt of $406.3 million, compared with stockholders’ equity of $1.67 billion and outstanding debt of $402.3 million at the end of the prior year. Also, cash and investments as of Dec 31, 2016 was $795.7 million.
Cash flow from operations in the reported quarter was $94.5 million compared with $124 million in fourth-quarter 2015.
Our Viewpoint
Janus Capital’s strategic investment in diversification and acquisition is expected to aid in profitability growth in the long run. Also, the company remains well positioned for competitive leverage growth, given its best-in-class investment boutique with potential for AUM improvement.
However, its equity-heavy portfolio makes it vulnerable to equity market volatility. Further, continued negative performance fee will limit the company’s profitability.
Janus Capital Group, Inc Price, Consensus and EPS Surprise
Janus Capital Group, Inc Price, Consensus and EPS Surprise | Janus Capital Group, Inc Quote
Janus Capital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) and Invesco Ltd. (IVZ - Free Report) are slated to release their fourth-quarter 2016 results on Jan 26. Apollo Global Management, LLC (APO - Free Report) will report its quarterly numbers on Feb 3.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>