Janus Capital Group Inc
) reported second quarter 2012 earnings per share attributable to
common shareholders of 13 cents lagged the Zacks Consensus Estimate
by a penny. Moreover, results compare unfavorably with 15
cents earned in the prior quarter and 23 cents in the year-ago
Lower topline growth and net outflows were the negatives for the
quarter. However, decline in operating expenses reflect better
Net income attributable to common shareholders stood at $23.4
million compared with $22.6 million in the prior quarter and $41.9
million in the prior-year quarter.
Performance in Detail
Total revenue plunged 5.7% sequentially and 22.0% year over year to
$206 million in the quarter. The sequential and year-over-year
decline reflect negative performance fees driven by
underperformance of certain mutual funds coupled with lower
investment management fees. Moreover, the revenue figure also
missed the Zacks Consensus Estimate of $219.0 million.
Total operating expenses decreased 4.9% sequentially and 15.5% year
over year to $153.9 million. The decline was driven by lower
distribution expenses and reduced employee compensation and
Operating margin was 25.3% compared with 25.9% in the prior quarter
and 31.0% in the year-ago quarter.
As of June 30, 2012, Janus Capital reported assets under management
(AUM) of $152.4 billion compared with $164.0 billion as of March
31, 2012, and $169.8 billion as of June 30, 2011. Average AUM
decreased 2.5% sequentially and 9.7% year over year to $155.0
The decrease in overall assets mainly reflects net market
depreciation of $7.6 billion and long-term net outflows of $3.9
billion. Long-term net outflows both at fundamental equity and
mathematical equity totaled $2.5 billion, partially offset by fixed
income long-term net inflows of $1.1 billion.
As of June 30, 2012, Janus Capital had stockholders' equity of $1.4
billion, cash and investments of $638.6 million and outstanding
debt of $540.4 million.
Janus Capital's Board of Directors declared a regular quarterly
cash dividend of 6 cents per share. The dividend will be paid on
August 20, 2012 to shareholders of record as of August 6, 2012.
Janus Capital faces increasing competition from its peers
Fortress Investment Group LLC
Federated Investors Inc.
). The company has the best-in-class investment boutique with the
potential for AUM and revenue along with competitive leverage
growth. However, weakness in flows remains a matter of concern.
Though fixed income segment and global operations are showing signs
of improvement, the company's equity-heavy portfolio will make it
vulnerable to the volatilities of the equity market. Further, a low
interest rate environment will likely affect the money market
business. Nevertheless, given its healthy balance sheet, we believe
Janus Capital has the potential to perform well in the long run.
Shares of Janus Capital Shares currently retain a Zacks #4 Rank,
which translates into a short-term Sell rating. However,
considering the fundamentals, we maintain a Neutral recommendation
on the stock.
FORTRESS INVEST (FIG): Free Stock Analysis
FEDERATED INVST (FII): Free Stock Analysis
JANUS CAP GRP (JNS): Free Stock Analysis Report
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