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BGC Partners (BGCP) Q1 Earnings Meet Estimates, Stock Down

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Shares of BGC Partners, Inc. (BGCP - Free Report) lost 6.7%, following the release of first-quarter 2019 results. Adjusted earnings from continuing operations of 18 cents per share were in line with the Zacks Consensus Estimate. The reported figure compared unfavorably with the prior-year quarter’s earnings of 22 cents.

While higher revenues aided results to some extent, increase in expenses was a headwind. Nonetheless, the company’s liquidity position remained strong.

Net income for the reported quarter (GAAP basis) was $61.9 million, up from $58.8 million recorded in the prior-year quarter.

Revenues Improve, Costs Rise

Total revenues were $544.8 million, up 3.8% year over year. This increase was driven by rise in total brokerage revenues; data, software and post-trade related income; interest income and other revenues. Moreover, the top line beat the Zacks Consensus Estimate of $536 million.

Total expenses were $469.7 million, up 1.1% year over year. This rise was due to an increase in total non-compensation costs.

Total net other income was $42 million, up from $34 million recorded in the year-ago quarter.

Solid Balance Sheet

As of Mar 31, 2019, BGC Partners had cash and cash equivalents (including cash segregated under regulatory requirement) of $528.1 million, up from $416.8 million recorded as of Dec 31, 2018. Total assets were $5 billion, up from $3.4 billion as of Dec 31, 2018.

Total stockholders’ equity as of Mar 31, 2019, was $784.6 million, up 2.1% from the prior quarter end.

Outlook

Revenues are expected to be in the range of $515-$555 million in second-quarter 2019.

Adjusted earnings before non-controlling interest in subsidiaries and taxes are expected to be $89-$105 million in the second quarter.

Adjusted earnings tax rate is expected to be 11-12% in 2019.

In 2019, the company’s fully diluted share count is expected to grow 3-4% year over year.

Our Take

Given a solid balance sheet position, BGC Partners has been expanding inorganically over the past few years. Recently, it completed the acquisition of ED Broking Group. These efforts are likely to further aid top line. However, rising expenses are expected to hurt the company’s profitability to some extent.

BGC Partners, Inc. Price, Consensus and EPS Surprise
 

Currently, BGC Partners carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Stocks

BlackRock, Inc.’s (BLK - Free Report) first-quarter 2019 adjusted earnings of $6.61 per share surpassed the Zacks Consensus Estimate of $6.20. However, the figure was 1.3% lower than the year-ago quarter’s number.

E*TRADE Financial (ETFC - Free Report) delivered a positive earnings surprise of 16% in the January-March quarter. Earnings of $1.09 per share comfortably surpassed the Zacks Consensus Estimate of 94 cents. Moreover, the results compared favorably with 88 cents recorded in the prior-year quarter.

Invesco (IVZ - Free Report) reported first-quarter 2019 adjusted earnings of 56 cents per share, beating the Zacks Consensus Estimate of 52 cents. However, the figure was 16.4% below the prior-year quarter level.

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