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Invesco (IVZ) Misses on Q1 Earnings, Cuts Dividend by 50%
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Invesco (IVZ - Free Report) reported first-quarter 2020 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 56 cents. Also, the bottom line declined 39.3% from the prior-year quarter.
Increase in operating expenses and net outflows were the major headwinds amid coronavirus scare. Yet, a rise in assets under management (AUM) balance and higher revenues — driven by the OppenheimerFunds buyout — were the supporting factors.
Shares of the company declined almost 4% in pre-market trading. Dismal quarterly performance and dividend cut to help “build liquidity” amid coronavirus-induced uncertainty hurt investor sentiments. Yet, a full day’s trading session will depict a clear picture.
On a GAAP basis, net income attributable to common shareholders came in at $81.5 million or 18 cents per share, down from $177.7 million or 44 cents per share a year ago.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.60 billion, increasing 31.6% year over year. However, the figure missed the Zacks Consensus Estimate of $1.71 billion. Adjusted net revenues jumped 29.2% from the prior-year quarter to $1.15 billion.
Adjusted operating expenses were $733.1 million, up 21.6% from the prior-year quarter.
Adjusted operating margin was 36.0% compared with 32.0% a year ago.
AUM Improves
As of Mar 31, 2020, AUM was $1.05 billion, increasing 10.3% year over year. Average AUM in the first quarter totaled $1.18 billion, up 26.1% from the year-ago quarter. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019, partially offset by long-term net outflows of $19.1 billion.
Dividend Cut
Invesco announced a quarterly cash dividend of 15.5 cents, down 50% from the prior payout. The dividend will be paid on Jun 3 to shareholders of record as of May 11.
Share Repurchase Update
During the first quarter, Invesco didn’t repurchase any shares.
Our View
Invesco remains well poised to benefit from its global footprint, product offerings and the OppenheimerFunds buyout. However, mounting expenses and outflows are likely to hurt the company’s financials.
Performance & Earnings Release Dates of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago reported number.
Affiliated Managers Group, Inc. (AMG - Free Report) and Waddell & Reed Financial, Inc. are scheduled to announce first-quarter results on Apr 27 and Apr 28, respectively.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Invesco (IVZ) Misses on Q1 Earnings, Cuts Dividend by 50%
Invesco (IVZ - Free Report) reported first-quarter 2020 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 56 cents. Also, the bottom line declined 39.3% from the prior-year quarter.
Increase in operating expenses and net outflows were the major headwinds amid coronavirus scare. Yet, a rise in assets under management (AUM) balance and higher revenues — driven by the OppenheimerFunds buyout — were the supporting factors.
Shares of the company declined almost 4% in pre-market trading. Dismal quarterly performance and dividend cut to help “build liquidity” amid coronavirus-induced uncertainty hurt investor sentiments. Yet, a full day’s trading session will depict a clear picture.
On a GAAP basis, net income attributable to common shareholders came in at $81.5 million or 18 cents per share, down from $177.7 million or 44 cents per share a year ago.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.60 billion, increasing 31.6% year over year. However, the figure missed the Zacks Consensus Estimate of $1.71 billion. Adjusted net revenues jumped 29.2% from the prior-year quarter to $1.15 billion.
Adjusted operating expenses were $733.1 million, up 21.6% from the prior-year quarter.
Adjusted operating margin was 36.0% compared with 32.0% a year ago.
AUM Improves
As of Mar 31, 2020, AUM was $1.05 billion, increasing 10.3% year over year. Average AUM in the first quarter totaled $1.18 billion, up 26.1% from the year-ago quarter. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019, partially offset by long-term net outflows of $19.1 billion.
Dividend Cut
Invesco announced a quarterly cash dividend of 15.5 cents, down 50% from the prior payout. The dividend will be paid on Jun 3 to shareholders of record as of May 11.
Share Repurchase Update
During the first quarter, Invesco didn’t repurchase any shares.
Our View
Invesco remains well poised to benefit from its global footprint, product offerings and the OppenheimerFunds buyout. However, mounting expenses and outflows are likely to hurt the company’s financials.
Invesco Ltd. Price, Consensus and EPS Surprise
Invesco Ltd. price-consensus-eps-surprise-chart | Invesco Ltd. Quote
Currently, Invesco carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Dates of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago reported number.
Affiliated Managers Group, Inc. (AMG - Free Report) and Waddell & Reed Financial, Inc. are scheduled to announce first-quarter results on Apr 27 and Apr 28, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>