On Jun 17, 2013, we reiterated our long-term Neutral
). This is based on its robust first-quarter results and sound
capital deployment activity. However, persistently rising
expenses, the volatile U.S. dollar and higher level of debt are
likely to dent its profitability.
Invesco's first-quarter earnings outpaced the Zacks Consensus
Estimate driven by higher net revenue, partially offset by a rise
in operating expenses. Further, increased assets under management
(AUM) and a stable balance sheet position were the tailwinds.
Following the first-quarter results, the Zacks Consensus Estimate
increased 3.4% to $2.15 per share for 2013 over the last 60 days,
with the majority of estimates moving north. Further, for 2014,
almost all the estimates moved up, thereby taking the Zacks
Consensus Estimate to $2.49 per share, over the same time-frame.
With both 2013 and 2014 estimates rising, Invesco currently
carries a Zacks Rank #3 (Hold).
Asset inflows at Invesco have witnessed an upward trend over the
past several quarters. With stabilizing equity markets, asset
inflows are anticipated to contribute significantly to earnings
Moreover, Invesco is an asset for yield-seeking investors. In Apr
2013, the company hiked its quarterly dividend by approximately
30% to 22.5 cents per share. Moreover, the company has an
effective share repurchase program in place.
However, higher expenses remain a concern for Invesco. Though the
company has adopted a prudent approach to lower its costs and
intends to continue with its expense management initiatives, the
impact is not expected to be felt in the near term.
Further, high debt level could restrict Invesco from procuring
additional finance for working capital, capital expenditures,
acquisitions, debt service requirements or other purposes.
Additionally, this might put the company in a disadvantageous
position if economic conditions deteriorate.
Other Stocks to Consider
Better performing stocks in the same sector that are worth a look
Noah Holdings Limited
Virtus Investment Partners, Inc.
GAMCO Investors, Inc.
). All of these carry a Zacks Rank #1 (Strong Buy).
GAMCO INVESTORS (GBL): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
NOAH HLDGS LTD (NOAH): Free Stock Analysis
VIRTUS INVESTMT (VRTS): Free Stock Analysis
To read this article on Zacks.com click here.