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Organic Growth Efforts Aid Cohen & Steers Amid Rising Costs

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Cohen & Steers Inc. (CNS - Free Report) is well poised for growth in the upcoming period, backed by solid asset under management (AUM) balance, diverse product offerings and investment strategies. However, persistently rising operating expenses is a near-term headwind.

Given the organic growth efforts and solid AUM balance, Cohen & Steers’ total revenues (GAAP basis) witnessed a five-year CAGR of 2.1% (ended 2018).  In addition, the company’s diverse product offerings and investment strategies are expected to further fuel top-line growth.

Also, Cohen & Steers’ total AUM has been witnessing consistent improvement. With improving economic conditions and favorable equity-market performance, its AUM balance is likely to register further growth in the quarters ahead.

Moreover, given a strong liquidity position, the company is expected to continue enhancing shareholders’ value through efficient capital-deployment activities. Notably, since 2011, Cohen & Steers has been increasing its dividend annually, with the latest one announced this February. Additionally, the company announced a special dividend in November 2018. Such actions, backed by solid liquidity position and earnings strength, make its capital plans sustainable.

Remarkably, shares of Cohen & Steers have surged 60.3% so far this year, outperforming the industry’s decline of 2%.

However, Cohen & Steers witnessed persistent rise in total expenses (GAAP basis) at a CAGR of 5.1%, over the last five years (2014-2018). The upswing can be attributed mainly to increasing employee compensation and benefits expenses, general and administrative costs and the company’s investments in franchises. With operating costs likely to keep flaring up, the company’s bottom-line growth might be affected to some extent.

Also, its high dependence on advisory revenues is a concern as a decline in advisory engagements or the market for advisory services will likely have an adverse impact on Cohen & Steers’ financial performance.

Moreover, the Zacks Consensus Estimate for earnings of $2.42 and $2.68 has remained unchanged for 2019 and 2020, respectively over the past 30 days. Further, the stock currently carries a Zacks Rank #3 (Hold).

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KKR & Co. Inc.’s (KKR - Free Report) ongoing-year earnings estimate has moved 1.8% north in 30 days’ time.  Additionally, the stock has appreciated 39.2%, so far this year. It currently holds a Zacks Rank #2 (Buy).

Invesco Ltd.’s (IVZ - Free Report) current-year earnings estimate has remained unrevised in the past 30 days. Further, the company’s shares have gained 1.7% in the year-to-date period. At present, it carries a Zacks Rank of 2.

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