On Sep 11, 2013, we reaffirmed our Neutral recommendation on
). This was based on the company's consistently positive inflows
and meaningful capital deployment activities. However, we remain
concerned about high debt levels and rising expenses.
On Jul 31, Invesco reported second-quarter 2013 earnings per
share of 50 cents, missing the Zacks Consensus Estimate by a
penny. A slight rise in revenues and a fall in expenses were the
positives for the quarter. Further, the company's balance sheet
position remained stable. However, a marginal fall in assets
under management was the headwind.
The Zacks Consensus Estimate for 2013 decreased 2.8% to $2.07
per share over the last 60 days. Further, for 2014, the Zacks
Consensus Estimate decreased 1.2% to $2.39 per share over the
same time period. Invesco currently carries a Zacks Rank #3
Positive asset inflows continue to be Invesco's strength.
Given the stabilizing equity markets, we expect asset inflows to
contribute significantly to the company's earnings growth.
Further, Invesco is an asset for yield-seeking investors as it is
actively involved in capital deployment activities. In Apr 2013,
the company hiked its quarterly dividend by about 30%. Since
2009, the company has been increasing its dividend every
On the flip side, a persistent rise in operating expenses
remains a plausible concern. Though the company has been
initiating measures to reduce costs, the impact is not expected
to be significantly visible any time soon. Moreover, Invesco's
high debt level could restrict it from procuring additional
finance for working capital, capital expenditures, acquisitions,
debt service requirements or other purposes.
Other Stocks to Consider
Some better-performing banks include
Affiliated Managers Group Inc.
Brookfield Asset Management Inc.
Fortress Investment Group LLC
). All of these stocks carry a Zacks Rank #2 (Buy).
AFFIL MANAGERS (AMG): Free Stock Analysis
BROOKFIELD ASST (BAM): Free Stock Analysis
FORTRESS INVEST (FIG): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
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