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Invesco (IVZ) Q4 Earnings Miss Estimates on Higher Expenses
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Invesco (IVZ - Free Report) reported fourth-quarter 2019 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 70 cents. However, the bottom line surged 45.5% from the prior-year quarter.
Results reflect a rise in assets under management (AUM) balance and higher revenues, driven by the OppenheimerFunds buyout. However, increase in operating expenses and net outflows were the major headwinds.
On a GAAP basis, net income attributable to common shareholders came in at $179.8 million or 39 cents per share, up from $114.2 million or 28 cents per share a year ago.
The company’s 2019 adjusted earnings totaled $2.55 per share, lagging the consensus estimate of $2.61, but growing 4.9% year over year. On a GAAP basis, net income attributable to common shareholders came in at $564.7 million or $1.28 per share, down from $882.8 million or $2.14 per share in 2018.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.74 billion, increasing 38.8% year over year. However, the figure missed the Zacks Consensus Estimate of $1.75 billion. Adjusted net revenues jumped 37.9% to $1.27 billion.
In 2019, GAAP operating revenues were $6.12 billion, up 15.1% year over year and beat the Zacks Consensus Estimate of $6.06 billion. Adjusted net revenues jumped 15.6% to $4.42 billion.
Adjusted operating expenses were $762.3 million, up 23.1% from the prior-year quarter.
Adjusted operating margin was 39.9% compared with 32.6% a year ago.
AUM Improves
As of Dec 31, 2019, AUM was $1.27 billion, surging 38.1% year over year. Average AUM for the fourth quarter totaled $1.20 billion, up 29.9%. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019 and strong equity markets performance.
Further, the December quarter witnessed long-term net outflows of $14 billion.
Share Repurchase Update
During the fourth quarter, Invesco repurchased shares worth $11 million.
As of 2019 end, the company repurchased $973 million worth of shares since announcing $1.2 billion buyback authorization in October 2018. Further, Invesco is on track to repurchase the remaining $227 million by the first quarter of 2021.
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 are likely to hurt its financials.
Performance & Release Date of Other Investment Managers
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2019 adjusted earnings of $8.34 per share surpassed the Zacks Consensus Estimate of $7.67. Moreover, the figure was 37.2% higher than the year-ago quarter’s number.
Cohen & Steers’ (CNS - Free Report) fourth-quarter 2019 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Also, the bottom line was 32.1% higher than the year-ago quarter figure.
Affiliated Managers Group, Inc. (AMG - Free Report) is slated to announce results on Feb 3.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Invesco (IVZ) Q4 Earnings Miss Estimates on Higher Expenses
Invesco (IVZ - Free Report) reported fourth-quarter 2019 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 70 cents. However, the bottom line surged 45.5% from the prior-year quarter.
Results reflect a rise in assets under management (AUM) balance and higher revenues, driven by the OppenheimerFunds buyout. However, increase in operating expenses and net outflows were the major headwinds.
On a GAAP basis, net income attributable to common shareholders came in at $179.8 million or 39 cents per share, up from $114.2 million or 28 cents per share a year ago.
The company’s 2019 adjusted earnings totaled $2.55 per share, lagging the consensus estimate of $2.61, but growing 4.9% year over year. On a GAAP basis, net income attributable to common shareholders came in at $564.7 million or $1.28 per share, down from $882.8 million or $2.14 per share in 2018.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.74 billion, increasing 38.8% year over year. However, the figure missed the Zacks Consensus Estimate of $1.75 billion. Adjusted net revenues jumped 37.9% to $1.27 billion.
In 2019, GAAP operating revenues were $6.12 billion, up 15.1% year over year and beat the Zacks Consensus Estimate of $6.06 billion. Adjusted net revenues jumped 15.6% to $4.42 billion.
Adjusted operating expenses were $762.3 million, up 23.1% from the prior-year quarter.
Adjusted operating margin was 39.9% compared with 32.6% a year ago.
AUM Improves
As of Dec 31, 2019, AUM was $1.27 billion, surging 38.1% year over year. Average AUM for the fourth quarter totaled $1.20 billion, up 29.9%. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019 and strong equity markets performance.
Further, the December quarter witnessed long-term net outflows of $14 billion.
Share Repurchase Update
During the fourth quarter, Invesco repurchased shares worth $11 million.
As of 2019 end, the company repurchased $973 million worth of shares since announcing $1.2 billion buyback authorization in October 2018. Further, Invesco is on track to repurchase the remaining $227 million by the first quarter of 2021.
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 are likely to hurt its financials.
Invesco Ltd. Price, Consensus and EPS Surprise
Invesco Ltd. price-consensus-eps-surprise-chart | Invesco Ltd. Quote
Currently, Invesco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Release Date of Other Investment Managers
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2019 adjusted earnings of $8.34 per share surpassed the Zacks Consensus Estimate of $7.67. Moreover, the figure was 37.2% higher than the year-ago quarter’s number.
Cohen & Steers’ (CNS - Free Report) fourth-quarter 2019 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Also, the bottom line was 32.1% higher than the year-ago quarter figure.
Affiliated Managers Group, Inc. (AMG - Free Report) is slated to announce results on Feb 3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>