S econd quarter adjusted earnings came in at 41 cents per share
) , marginally missing the Zacks Consensus Estimate of 43 cents.
This also compares unfavorably with the adjusted earnings of 44
cents in the previous quarter.
BLACKSTONE GRP (BX): Free Stock Analysis Report
INVESCO LTD (IVZ): Free Stock Analysis Report
T ROWE PRICE (TROW): Free Stock Analysis Report
To read this article on Zacks.com click here.
Invesco's lower-than-expected results were attributable to a drop
in net revenue, partly offset by a marginal dip in operating
expenses. Moreover, assets under management (AUM) deteriorated
slightly while the balance sheet position remained stable during
On a GAAP basis, net income was $153.9 million or 34 cents per
share, compared with $193.9 million or 43 cents in the prior
Behind the Headlines
Adjusted net revenue dipped 3.3% sequentially to $712.1 million. A
significant drop in performance fees and other revenue were the
primary reasons for the decline. Similarly, changes in the foreign
exchange rate had an adverse impact on net revenue. Moreover, net
revenue was also nowhere near the Zacks Consensus Estimate of $1.05
Adjusted operating expenses fell marginally by 0.9% from the prior
quarter to $463.1 million. The decrease was mainly due to lower
employee compensation expenses and increased marketing expenses,
partially offset by higher general and administrative expenses.
Adjusted operating margin for the quarter was 35.0%, down from
36.6% in the prior quarter.
Assets under Management
As of June 30, 2012, AUM plummeted 3.9% sequentially to $646.6
billion, reflecting net market losses and adverse foreign exchange
rate changes. Average AUM for the reported quarter was $651.2
billion, down 1.1% from $658.2 billion in the prior quarter.
Long-term net outflows during the quarter were $4.9 billion
compared with long-term net inflows of $7.0 billion in the
As of June 30, 2012, cash and cash equivalents were $718.4 million,
compared with $727.4 million as of December 31, 2011. Total debt
was $1,341.6 million as of June 30, 2012, against $1,284.7 million
as of December 31, 2011.
Additionally, the credit facility balance was $811.0 million as of
June 30, 2012, against $580.0 million as of March 31, 2012.
Furthermore, during the quarter, Invesco repaid the $215.1 million
of outstanding 5.625% Senior Notes. This redemption was funded
through the credit facility and existing cash balances.
Share Repurchase Update
During the reported quarter, Invesco repurchased $75 million worth
of shares, representing 3.2 million shares at an average price of
$23.30 per share. Hence, for the first half of the year, the
company repurchased shares worth $150 million.
Concurrent with the earnings release, the company declared a
second-quarter dividend of 17.25 cents per share. The dividend will
be paid on September 7 to shareholders of record as of August 22.
The Blackstone Group
) second quarter economic net income exceeded the Zacks Consensus
Estimate. Better-than-expected results were aided by lower
expenses, which were to some extent offset by a significant drop in
the top line. Moreover, a robust improvement in AUM was also a
T. Rowe Price Group Inc.
) second quarter earnings were a penny below the Zacks Consensus
Estimate. A higher-than-expected top-line growth was a positive for
the quarter whereas elevated operating expenses were a negative.
Invesco's long-term investment performance was boosted by an
uptrend in the global equity markets, which is also expected to
lift the company's operating results. Moreover, the operating
leverage is expected to improve significantly over the long term
due to Invesco's cost-control initiatives.
Invesco is well-positioned to benefit from improved global
investment flows, resulting from its broad diversification.
However, the volatile U.S. dollar and increasing competition remain
major areas of concern.
Invesco currently retains a Zacks #4 Rank, which translates into a
short-term Sell rating. Considering the fundamentals, we also
maintain an 'Underperform' recommendation on the stock.