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Invesco (IVZ) Q2 Earnings Beat Estimates, Revenues Improve

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Invesco (IVZ - Free Report) reported second-quarter 2019 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 57 cents. However, the bottom line was 1.5% below the prior-year quarter figure.

Results benefited from improvement in assets under management (AUM) balance and rise in revenues, driven by the OppenheimerFunds buyout. However, increase in operating expenses and net outflows were the undermining factors.

On a GAAP basis, net income attributable to common shareholders came in at $40.1 million or 9 cents per share, down from $245.1 million or 59 cents per share a year ago.

Revenues & Expenses Rise

GAAP operating revenues were $1.44 billion, up 5.8% year over year. However, the figure missed the Zacks Consensus Estimate of $1.52 billion. Adjusted net revenues increased 5.9% to $1.03 billion.

Adjusted operating expenses were $668.1 million, up 11.8% from the prior-year quarter. The rise was mainly due to an increase in property, office and technology expenses.

Adjusted operating margin for the quarter was 35.2% compared with 38.7% a year ago.

AUM Improves

As of Jun 30, 2019, AUM was $1.20 billion, up 24.3% year over year. Average AUM for the second quarter totaled $1.06 billion, up 8.4%. Significant improvement AUM is mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019.

Further, the June quarter witnessed long-term net outflows of $3.9 billion.

Share Repurchase Update

During the second quarter, Invesco repurchased shares worth $264 million.

Our View

Invesco remains well poised to benefit from improved global investment flows, supported by a diversified footprint, product offering and the OppenheimerFunds buyout. However, mounting expenses and outflows will likely continue to hurt its financials.

Invesco Ltd. Price, Consensus and EPS Surprise

 

Invesco Ltd. Price, Consensus and EPS Surprise

Invesco Ltd. price-consensus-eps-surprise-chart | Invesco Ltd. Quote

Currently, Invesco 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 Investment Managers

Blackstone (BX - Free Report) reported second-quarter distributable earnings of 57 cents, beating the Zacks Consensus Estimate of 50 cents. Moreover, the figure reflected improvement from 56 cents earned in the prior-year quarter. Results benefited from growth in AUM and lower expenses. However, a decline in revenues acted as a headwind.

BlackRock, Inc.’s (BLK - Free Report) second-quarter adjusted earnings of $6.41 per share lagged the Zacks Consensus Estimate of $6.52. Moreover, the figure was 3.8% lower than the year-ago quarter’s number. Results were hurt by a decline in revenues along with higher expenses. Nevertheless, growth in AUM supported results to some extent.

T. Rowe Price Group, Inc. (TROW - Free Report) delivered a positive earnings surprise of 6.3% in second-quarter 2019. Adjusted earnings per share came in at $2.03, outpacing the Zacks Consensus Estimate of $1.91. The bottom line also improved 14.7% from the year-ago figure of $1.77. Results were driven by higher AUM and revenues. However, escalating expenses was an undermining factor.

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