Invesco (IVZ) Beats Q2 Earnings on Strong Revenues, AUM Up - Analyst Blog

By Zacks Equity Research,

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Driven by impressive top-line growth, Invesco Ltd. ( IVZ ) reported second-quarter 2014 adjusted earnings of 65 cents per share. It surpassed the Zacks Consensus Estimate of 58 cents, marking the fourth consecutive earnings beat. This was also up 30.0% from the prior-year quarter figure of 50 cents.

Better-than-expected results were driven by a rise in revenues, partially offset by higher expenses. Further, the company's balance sheet position remained strong and assets under management (AUM) recorded robust growth.

On a GAAP basis, net income attributable to common shareholders was $274.5 million or 63 cents per share, up from $202.6 million or 45 cents in the year-ago quarter.

Performance in Details

Adjusted net revenue came in at $901.0 million, increasing 14.0% from the prior-year quarter. The rise was attributable to an increase in investment management fees, other revenues and third-party distribution, service and advisory revenues. These were, however, partly offset by a fall in performance fees and service & distribution fees. However, the figure came below the Zacks Consensus Estimate of $1.3 billion.

Adjusted operating expenses increased 9.2% from the prior-year quarter to $524.0 million. This was due to a rise in all expense components.

Adjusted operating margin for the quarter was 41.8%, up from 39.3% in the year-ago quarter.

As of Jun 30, 2014, AUM increased 13.7% year over year to $802.4 billion. Average AUM for the quarter was $790.1 billion, up 9.8% from $719.8 billion in the prior-year quarter. However, long-term net outflow was $6.9 billion compared with an inflow of $1.4 billion in the prior-year quarter.

As of Jun 30, 2014, cash and cash equivalents were $1,196.0 million, compared with $1,331.2 million as of Dec 31, 2013. Total long-term debt stood at $1,588.9 million as of Jun 30, 2014, almost unchanged compared with the Dec 31, 2013 level.

Capital Deployment Initiatives

In the reported quarter, Invesco repurchased shares worth $50.0 million at an average price of $36.74 per share.

Concurrent with the earnings release, Invesco announced a quarterly cash dividend of 25 cents per share. The dividend will be paid on Sep 5 to shareholders of record as on Aug 21, with an ex-dividend date of Aug 19.

Our Viewpoint

Invesco's performance continues to benefit from an improvement in the worldwide equity markets. However, high debt levels and rising expenses remain matters of concern.

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

Performance of Other Investment Managers

Top-line growth aided by an increase in AUM drove BlackRock, Inc.'s ( BLK ) second-quarter adjusted earnings of $4.89 per share. It surpassed the Zacks Consensus Estimate of $4.46 for the third consecutive quarter.

Impressive performance fees drove The Blackstone Group L.P.'s ( BX ) second-quarter 2014 economic net income (ENI) of $1.15 per share, which outpaced the Zacks Consensus Estimate by 64%.

Waddell & Reed Financial Inc.'s ( WDR ) reported second-quarter 2014 earnings per share of 98 cents, surpassing the Zacks Consensus Estimate of 92 cents.

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

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: ENI , IVZ , WDR , BX , BLK

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