On Sep 13, 2013, we maintained our long-term recommendation on
Janus Capital Group Inc.
) at Neutral, based on the company's best-in-class investment
boutique with the potential for assets under management (AUM) and
revenue along with competitive leverage growth. However, weakness
in flows and a persistent low interest-rate environment remain
AFFIL MANAGERS (AMG): Free Stock Analysis
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We view Janus Capital as a sound asset for yield-seeking
investors. The company's board of directors increased its regular
quarterly cash dividend by 17% in Apr 2013. Notably, during
first-half 2013, the company repurchased $12.6 million worth of
common stock and paid $13.3 million as dividends to shareholders.
In addition to enhancing its organic growth, Janus Capital is
focusing on reducing expenses and boosting both fixed and
discretionary cost savings to improve its operating leverage.
Looking forward to second-half 2013, the company is focused on
delivering strong long-term investment performance by controlling
expenses and continuing to invest in the business for long-term
However, at the current level, the asset management business is
under cyclical and secular pressures along with ongoing margin
pressures, many of which have been aggravated by the financial
crisis. These pressures include volatile markets and new
regulatory compliances. Though Janus Capital remains well
positioned over the long term, given short-term performance
hindrances and macro headwinds, a limited upside is expected in
the near term.
Janus Capital reported second-quarter 2013 earnings per share of
14 cents, lagging the Zacks Consensus Estimate by 2 cents.
Moreover, results compared unfavorably with the prior-quarter
earnings of 19 cents. Decreased AUM, aided by net outflows was a
headwind for the quarter.
Over the last 30 days, the Zacks Consensus Estimate for 2013
remained stable at 60 cents per share, while it decreased 1.4% to
69 cents per share for 2014. Hence, the company carries a Zacks
Rank #3 (Hold).
Some Major Companies to Consider
Some better performing investment managers that are worth
Affiliated Managers Group Inc.
Noah Holdings Limited
Virtus Investment Partners, Inc.
). All 3 companies carry a Zacks Rank #2 (Buy).