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Will WisdomTree (WETF) Disappoint This Earnings Season?

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WisdomTree Investments (WETF - Free Report) is scheduled to report second-quarter 2018 results on Jul 27, before the market opens. While revenues are likely to grow year over year, earnings might remain stable.

In the last reported quarter, this New York-based exchange traded fund and product sponsor’s earnings were in line with the Zacks Consensus Estimate. Higher expenses and continued outflows were offset by increase in revenues along with rise in assets under management (AUM).

WisdomTree does not have an impressive earnings surprise history. It surpassed estimates only once in the trailing four quarters with an average negative surprise of 3.8%.

WisdomTree Investments, Inc. Price and EPS Surprise

Notably, the Zacks Consensus Estimate for earnings for the to-be-reported quarter has remained stable at 9 cents over the last 30 days. The bottom line is projected to be flat year over year. The consensus Estimate for sales is $74.2 million, reflecting 17% year-over-year growth.

Earnings Whispers

According to our quantitative model, chances of WisdomTree beating the Zacks Consensus Estimate in the second quarter 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 — for increasing the odds of an earnings beat.

(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)

Zacks ESP: The Earnings ESP for WisdomTree is -0.27%.

Zacks Rank: The stock carries a Zacks Rank #4 (Sell).

Further, WisdomTree’s activities during the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable over the last seven days.

Factors at Play

Outflows Might be Recorded: WisdomTree has significant exposure to internationally hedged products, particularly major currency-hedged funds — HEDJ and DXJ — which are highly unstable. Thus, the company is likely to have recorded outflows during the quarter.

Expenses Likely to Remain Elevated: WisdomTree remains focused on executing strategic growth initiatives, including expansion of distribution capabilities and investment in technology. Such initiatives might have increased expenses in the second quarter.

Revenues Might Increase: WisdomTree’s revenues are likely to rise with support from higher AUM and advisory revenues. The consensus estimate reflects a 40.6% year-over-year increase in AUM to $60.4 billion.  Further, the estimates for ETF advisory fees of $76 million indicates a 35.8% increase.

Stocks to Consider

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

Ares Management L.P. (ARES - Free Report) is slated to release results on Aug 2. It has an Earnings ESP of +0.36% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Encore Capital Group Inc (ECPG - Free Report) has an Earnings ESP of +5.86% and a Zacks Rank #3. It is expected to report results on Aug 8.

Hamilton Lane Inc. (HLNE - Free Report) has an Earnings ESP of +6.96% and a Zacks Rank #3. It is expected to report results on Aug 7.

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