On Jun 27, 2013, we reiterated our Neutral recommendation on
Federated Investors, Inc.
), based on its significant growth potential in the long run
given its fairly liquid balance sheet and diversified asset as
well as product mix. However, persistent regulatory pressures,
slow global economic growth and a low-interest rate environment
are expected to keep earnings under pressure in the upcoming
After the evaluation of Federated's expected continuing cash flow
from operations, and its ability to obtain additional financing
arrangements and issue debt or stock, we believe that the company
will have sufficient liquidity to meet its present as well as
reasonably foreseeable cash needs. Federated boasts a strong
liquidity position with cash and other investments of $307
million at the end of first-quarter 2013.
Under the current pressure for money market funds owing to the
lingering low interest-rate environment and tightening
regulations, acquiring money market assets depict the company's
buoyancy in the money market business. Federated is looking
forward to many such opportunities in order to provide cream
services to its clients as it acquired more than $5 billion worth
of money market assets in 2012.
However, Federated's first-quarter 2013 earnings per share of 41
cents lagged the Zacks Consensus Estimate by a penny.
Lower-than-expected results were driven by a decline in top line,
aided by an increase in voluntary fee waivers.
Over the last 90 days, the Zacks Consensus Estimate for 2013
decreased 4.5% to $1.71 whereas for 2014 it declined by 1.6% to
$1.87 per share. Currently, Federated carries a Zacks Rank #3
Investment Managers to be Consider
Some investment managers that are worth considering include
Artisan Partners Asset Management Inc.
Virtus Investment Partners, Inc.
Noah Holdings Limited
). All 3 companies carry a Zacks Rank #1 (Strong Buy).
ARTISAN PTNR AM (APAM): Free Stock Analysis
FEDERATED INVST (FII): Free Stock Analysis
NOAH HLDGS LTD (NOAH): Free Stock Analysis
VIRTUS INVESTMT (VRTS): Free Stock Analysis
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