Invesco Earnings Beat on Strong Inflows - Analyst Blog


Driven by impressive client inflows, Invesco Ltd. ( IVZ ) reported fourth-quarter 2013 adjusted earnings of 58 cents per share, which beat the Zacks Consensus Estimate by a penny. Additionally, this was up 38.1% from the prior-year quarter figure of 42 cents.

Better-than-expected results were driven by top-line growth, partially offset by higher expenses. Further, the company's balance sheet position remained stable and AUM growth was robust.

On a GAAP basis, net income attributable to common shareholders was $287.4 million or 64 cents per share, up from $158.7 million or 35 cents in the year-ago quarter.

For full-year 2013, adjusted earnings per share were $2.13, up 29.1% year over year. Further, this surpassed the Zacks Consensus Estimate of $2.11.

Performance in Details

For 2013, adjusted net revenue grew 14.7% year over year to $3.3 billion. However, it lagged the Zacks Consensus Estimate of $4.7 billion.

Adjusted net revenue was $857.3 million, increasing 17.3% from the prior-year quarter. Growth in all the revenue components led to the rise. However, it was below the Zacks Consensus Estimate of $1.2 billion.

Adjusted operating expenses increased 8.0% from the prior-year quarter to $510.1 million. This was mainly due to rise in marketing costs, employee compensation expenses as well as general and administrative expenses.

Adjusted operating margin for the quarter was 40.5%, rising from 35.3% in the year-ago quarter.

As of Dec 31, 2013, AUM increased 16.7% year over year to $778.7 billion. The average AUM for the said quarter was $761.7 billion, up 15.4% from $660.2 billion in the prior-year quarter. Further, long-term net inflows fell to $1.0 billion from $2.7 billion on a year-over-year basis.

Balance Sheet

As of Dec 31, 2013, cash and cash equivalents were $1,331.2 million, compared with $835.5 million as of Dec 31, 2012. Total long-term debt was $1,588.6 million as of Dec 31, 2013, against $1,186.0 million as of Dec 31, 2012.

In Dec 2013, Invesco amended the existing $1.25 billion credit facility to extend its maturity to Dec 2018.

Capital Deployment Initiatives

In the reported quarter, Invesco repurchased $350.0 million worth of shares at an average price of $34.64 per share. During 2013, the company brought back $470.5 million of shares, representing 13.9 million shares at an average price of $33.74.

In Oct 2013, the company authorized an additional $1.5 billion for the existing share repurchase program with no stated expiry date.

Performance of Other Asset Managers

BlackRock, Inc. 's ( BLK ) fourth-quarter adjusted earnings significantly surpassed the Zacks Consensus Estimate. Results benefited from rise in revenues, partly offset by higher operating expenses.

Among other investment managers, Legg Mason Inc. ( LM ) is scheduled to report December quarter end results on Jan 31 and Ameriprise Financial, Inc. ( AMP ) on Feb 4.

Our Viewpoint

Invesco's long-term investment performance continues to benefit from improvement in the global equity markets, which are expected to drive the company's operating results as well. The company is well positioned to benefit from increased global investment flows owing to its broad diversification. However, high debt levels and rising expenses remain concerns.

Currently, Invesco carries a Zacks Rank #2 (Buy).

AMERIPRISE FINL (AMP): Free Stock Analysis Report

BLACKROCK INC (BLK): Free Stock Analysis Report

INVESCO LTD (IVZ): Free Stock Analysis Report

LEGG MASON INC (LM): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AMP , BLK , IVZ , LM

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