Janus Capital Group Inc.
) reported third-quarter 2013 earnings per share attributable to
common shareholders of 17 cents, in line with the Zacks Consensus
Estimate. However, results compared favorably with the prior-year
quarter earnings of 15 cents.
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Top-line growth, increased asset under management (AUM) and
reduced operating expenses depict the stability in earnings.
However, net outflows were a headwind for the quarter.
Net income stood at $32.6 million compared with $25.1 million in
the prior-year quarter.
Performance in Detail
Total revenue surged 4.2% year over year to $217.7 million,
primarily due to higher investment management fee revenues,
partially offset by negative performance fees. Moreover,
revenues were marginally above the Zacks Consensus Estimate of
Total operating expenses decreased 1.5% year over year to $158.7
million. The fall came on the back of reduced long-term incentive
compensation and lower distribution expenses. Operating margin
was 27.1% compared with 22.9% in the prior-year quarter.
As of Sep 30, 2013, Janus Capital reported AUM of $166.7 billion,
up from $158.2 billion as of Sep 30, 2012. Moreover, average AUM
increased 6.2% on a year-over-year basis to $165.2 billion from
The increase in company-wide assets during third-quarter 2013
primarily reflects net market appreciation of $10.3 billion,
partially offset by long-term net outflows of $4.2 billion.
Fundamental equity long-term net outflows totaled $4.9 billion,
while mathematical equity long-term net inflows totaled $0.7
billion. However, fixed income sales were offset by redemptions
during the quarter.
As of Sep 30, 2013, Janus Capital had stockholders' equity of
$1.5 billion, cash and investments of $792.6 million and
outstanding debt of $543.0 million compared with stockholders'
equity of $1.5 billion, cash and investments of $759.9 million
and outstanding debt of $549.4 million in the prior quarter. Cash
flow from operations during the reported quarter was $78.3
million compared with $67.0 million in the prior quarter.
Capital Deployment Activity
During third-quarter 2013, Janus Capital repurchased 1.07 million
shares of its common stock at an average price of $8.99 per share
and a total cost of $9.6 million.
Janus Capital 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 makes
it vulnerable to the equity market. Nevertheless, given its
healthy balance sheet, we believe Janus Capital has the potential
to perform well in the long run aided by a significant rebound in
Shares of Janus Capital currently carry a Zacks Rank #2 (Buy).
Among other investment managers,
Legg Mason Inc.
) is scheduled to report September quarter end results on Oct 25,
Ameriprise Financial, Inc.
) on Oct 29 and
) on Oct 31.