4 Asset Managers for Earnings Beats
The overall market was volatile in the first quarter, but major
U.S. equity indexes showed strength. The volatility stemmed from
various issues including the Federal Reserve's tapering of fiscal
stimulus, sluggish growth in emerging markets and the geopolitical
tension that took place when Russian troops advanced towards
Ukraine's Crimean Peninsula.
However, investors' confidence has been improving at a modest level
and consequently the investment management industry is currently
benefiting from the broader trend. The investment management
industry currently holds a Zacks Industry Rank #35 out of more than
250 industries. This reflects that it stands out in the top 14%. As
a result, we remain optimistic about the performance of asset
managers this earnings season.
Further, the asset managers have been showing some encouraging
trends in the last few quarters. These include growth in overall
net inflows due to growing demand from investors as the industry
exhibited stable returns over a long time frame. This may support
asset managers' bottom line this time around.
On the other hand, investment managers are striving to launch
technologically advanced products, alternative AUM products and
expand business to attract new assets and clients. Moreover, the
competitive environment and stringent regulatory landscape have led
to a rise in expenses in the industry
However, we think the overall industry has advanced to a great
extent. Given the positive sentiment in the first quarter, it's a
good idea to bet on a few investment management stocks that are
poised to beat earnings estimates this quarter. An earnings beat
will raise investors' confidence in these stocks, leading to rapid
How to Single-Out?
Picking the right stocks from the investment management space isn't
an easy task. One way to narrow down the list of choices is by
looking at stocks that have the combination of a favorable Zacks
Rank - Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) - and a
Earnings ESP is our proprietary methodology for identifying stocks
that have the best chances of posting a positive surprise in the
upcoming announcement. It shows the percentage difference between
the Most Accurate estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination,
a positive earnings surprise happens nearly 70% of
The Chosen Ones
For investors seeking to apply this strategy to their portfolio, we
have handpicked 4 investment management stocks that are poised to
beat earnings estimates this quarter:
Affiliated Managers Group Inc.
) is a Zacks Rank #2 stock with an earnings ESP of +0.42%. The
Zacks Consensus Estimate for the first quarter is $2.37 per share.
In the past 30 days, estimates have inched up by 1.3%
Headquartered in Prides Crossing, Massachusetts Affiliated Managers
is engaged in providing investment management services to mutual
funds, institutional clients, and high net worth individuals across
The company has registered an average earnings surprise of 9.1% in
the trailing 4 quarters.
Affiliated Managers is scheduled to announce its first-quarter
results on Apr 29.
The Carlyle Group LP
) is a Zacks Rank #3 stock with an earnings ESP of +4.08%. The
Zacks Consensus Estimate for the first-quarter 2014 is 98 cents per
share. In the past 30 days, estimates have risen by 46.3%.
Based in Washington, with additional offices across North America,
Latin America, Asia, Africa, and Europe,
as an investment firm is engaged in direct and fund of fund
The company has registered an average earnings surprise of 9.5%
over the trailing 4 quarters.
is scheduled to announce its first-quarter results on Apr
AllianceBernstein Holding L.P.
) has a Zacks Rank #3 along with an earnings ESP of +2.44%. The
Zacks Consensus Estimate for the first quarter is pegged at 41
cents per share.
New York based
offers investment management and associated services in the United
States as well as globally.
The company has registered an average earnings surprise of 15.3% in
the past 4 quarters.
is scheduled to announce its first-quarter 2014 results on Apr
Legg Mason Inc.
) has a Zacks Rank #3 along with an earnings ESP of +1.12%. The
Zacks Consensus Estimate for the fiscal fourth-quarter 2014 stands
at 89 cents per share.
Baltimore, Maryland based
through its subsidiaries offers investment management and
associated services to institutional and retail clients,
company-sponsored mutual funds as well as other pooled investment
is scheduled to announce its fiscal fourth quarter 2014 results
on May 1.
The Road Ahead
Investment management stocks are expected to perform well in the
upcoming quarters with the rebound of the equity markets and rising
demand for personalized investment solutions. Further, even if the
interest rate environment doesn't reverse, asset managers will not
suffer like banks.
Moreover, high shareholder return is a bonus for these stocks as
most of the asset managers return a major part of their earnings to
shareholders in the form of dividends and share repurchases.
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