Asset Managers poised to
on Earnings Beats
The investment management sector has been reaping solid returns
over the past few quarters, thanks to higher demand for customized
investment strategies and products. It has, in fact, earned a
safe-bet status among investors aiming for large profits.
Investment managers generally introduce technologically advanced
products and market those (with high advertisement spends) to
attract new assets and clients. Subsequently, their performance and
brand name help in increasing market share and boosting organic
Along with rising assets under management (AUM) over the last
couple of quarters on the back of economic recovery, revenues and
profits have been on an upswing. However, stringent regulations
still remain a concern.
Given the positive sentiment, we could choose 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 price appreciation.
How to Pick?
Picking favorable stocks from the investment management space isn't
an easy task. One way to narrow down the list of choices during
this earnings season 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 positive Zacks
Earnings ESP is our proprietary methodology for identifying stocks
that have the best chances of posting a positive surprise in the
upcoming earnings announcement. It shows the percentage difference
between the Most Accurate estimate and the Zacks Consensus
Our research shows that for stocks with this combination, the
chance of a positive earnings surprise is as high as 70%.
For investors seeking to apply this strategy to their portfolio, we
have chosen 3 investment management stocks that are poised to beat
earnings estimates this quarter:
T. Rowe Price Group, Inc.
) is a Zacks Rank #2 stock with an earnings ESP of +0.97%. The
Zacks Consensus Estimate for the fourth quarter is $1.03 per share.
In the past 30 days, estimates have inched up by 2 cents.
Headquartered in Baltimore, Maryland with additional offices across
North America, Europe and Asia, T. Rowe Price Group provides
services to individual and institutional investors, retirement
plans, and financial intermediaries. Through its subsidiaries, the
company manages client-focused equity, fixed income, and balanced
portfolios. The firm also launches equity, fixed income, and
balanced mutual funds for its clients. It invests in the public
equity, fixed income, markets worldwide.
The company has registered an average earnings surprise of 0.5% in
the trailing 4 quarters.
T. Rowe Price Group is scheduled to announce its fourth-quarter and
full-year 2013 results on Jan 28.
Franklin Resources Inc.
) is a Zacks Rank #2 stock with an earnings ESP of +1.08%. The
Zacks Consensus Estimate for the fiscal first quarter is 93 cents
per share. In the past 30 days, estimates have risen 2 cents.
Headquartered in San Mateo, California, Franklin provides
investment advisory and related services to retail mutual funds,
institutional and private accounts and other investment products.
The mutual funds and other products are sold to the public under 7
brands, namely Franklin Templeton, Mutual Series, Bissett,
Fiduciary Trust, Darby, Balanced Equity Management and K2.
The company has registered an average earnings surprise of 1.3%
over the trailing 4 quarters.
-Franklin is scheduled to announce its fiscal first quarter 2014
results on Jan 30.
Calamos Asset Management Inc.
) has a Zacks Rank #1 along with an earnings ESP of +7.14%. The
Zacks Consensus Estimate for the fourth quarter is pegged at 14
cents per share. Of late, analysts have been revising their
quarterly and full-year estimates upward, suggesting a solid
earnings momentum that bodes well for the future.
Illinois-based Calamos provides investment advisory services
through its subsidiaries to institutions and individuals,
principally in the United States. The company applies a proprietary
investment process centered on risk management across an expanding
range of investment strategies within the equity, balanced,
convertible, high yield and alternative investment classes.
Moreover, the company has registered an average earnings surprise
of 50.4% in the past 4 quarters.
Calamos is scheduled to announce its fourth-quarter and full-year
2013 results on Jan 28.
Investment management stocks are expected to perform well in the
coming quarters with the demand for personalized investment
solutions on the rise. Moreover, most of these companies return the
major part of their earnings to shareholders in the form of
dividends and share repurchases.
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