Eaton Vance Corp.
) rose nearly 3% following the release of its fiscal third-quarter
2014 (ended Jul 31) results. Adjusted earnings came in at 63 cents
per share, up 21% year over year. However, earnings were in line
with the Zacks Consensus Estimate.
Results benefited from growth in revenues, partially offset by
elevated operating expenses. Additionally, consistent enhancement
in assets under management (AUM) as well as balance sheet continued
to be the favorable factors.
Eaton Vance's net income grew significantly over the prior-year
quarter to $81.3 million.
Eaton Vance Corp - Earnings Surprise |
Performance in Detail
Eaton Vance's total revenue amounted to $367.6 million, up 5% year
over year. The increase was primarily attributable to higher
investment advisory and administrative fees as well as other
revenues. However, these were partially offset by a fall in
distribution and underwriter fees and service fees. Also, the
figure was almost in line with the Zacks Consensus Estimate of
Total expenses rose 2% year over year to $236.4 million. The
increase was on the back of higher compensation, service fee
expense, fund related expenses as well as other expenses. However,
these were partly mitigated by lower amortization of deferred sales
Total operating income climbed 10% year over year to $131.2
As of Jul 31, 2014, Eaton Vance had $362.0 million in cash and cash
investments as compared with $461.9 million as of Oct 31, 2013.
Further, the company had no borrowings outstanding against its $300
million credit facility.
Assets Under Management
Eaton Vance's consolidated AUM grew 7% year over year to $288.2
billion, reflecting net outflows of $0.2 billion and market
appreciation of $19.6 billion.
As of Jul 31, 2014, long-term fund AUM summed $135.0 billion, up 5%
year over year. Moreover, institutional AUM came in at $98.4
billion, reflecting a 10% increase from the year-ago quarter.
Further, high net worth AUM rose 9% year over year to $20.9 billion
while retail AUM totaled $33.8 billion, up 9% from the prior-year
During the first nine months of fiscal 2014, Eaton Vance
repurchased nearly 6.0 million shares of its Non-Voting Common
Stock for $227.9 million under its existing repurchase
authorization. The company has a share repurchase authorization of
8.0 million, out of which around 7.2 million shares remain to be
Eaton Vance seems to be well positioned for growth given the
company's diversified revenue mix and footprint along with its
sustainable AUM growth. Moreover, the company's financials will
likely be propelled further with the growing need for risk
management and alternative investment solutions within the
financial service industry.
However, we remain apprehensive about the unfavorable effects of
the present capital market volatility as well as sluggish economic
environment on the company's profitability going forward.
Eaton Vance currently carries a Zacks Rank #3 (Hold).
Performance of Other Asset Managers
Among other investment management firms, The Blackstone Group L.P.
), BlackRock, Inc. (
) and Ameriprise Financial Inc. (
) surpassed the Zacks Consensus Estimate in their latest earnings
releases. Their results were driven by top-line improvement,
partially offset by escalating expenses. Further, all three
companies have recorded impressive AUM growth.
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