It has been about a month since the last earnings report for Eaton Vance (EV - Free Report) . Shares have added about 16.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Eaton Vance due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Eaton Vance Q2 Earnings Beat Estimates, Costs Fall
Eaton Vance’s second-quarter fiscal 2020 (ended Apr 30) adjusted earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 71 cents. Including certain one-time items, earnings came in at 65 cents, down 27% year over year.
Results were driven by prudent expense management. However, fall in AUM balance and revenues were on the downside.
Net income attributable to shareholders (GAAP basis) was $72.1 million, down 29.2% from the year-ago quarter.
Revenues Down, Expenses Fall
Total revenues in the reported quarter were $405.9 million, down 1% year over year. Fall in management fees was partially offset by higher performance fees. The top line also lagged the Zacks Consensus Estimate of $428.7 million.
Total expenses decreased marginally from the prior-year quarter to $284 million. Lower compensation and distribution expenses were partially muted by higher service fee expense, amortization of deferred sales commissions, fund-related expenses and other expenses.
Total operating income slid 4% year over year to $122 million.
Liquidity Position Strong, AUM Balance Declines
As of Apr 30, 2020, Eaton Vance had $914.9 million in cash and cash equivalents compared with $557.7 million on Oct 31, 2019. The company had no borrowings outstanding against its $300-million credit facility.
Eaton Vance’s consolidated AUM edged down 1% year over year to $465.3 billion as of Apr 30, 2020. The company recorded market price depreciation, partly offset by net inflows.
Share Repurchase Update
During the first six months of fiscal 2020, Eaton Vance repurchased and retired 2.4 million shares of its Non-Voting Common Stock for $299.9 million under the company’s existing repurchase authorization.
Effective tax rate for fiscal 2020 is expected between 26% and 27%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Eaton Vance has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Eaton Vance has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.