Janus Capital Group Inc.
) reported first-quarter 2013 earnings per share of 15 cents,
lagging the Zacks Consensus Estimate by a penny. This also
compared unfavorably with the prior-year quarter earnings of 17
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Lower-than-expected results were due to declining revenues and
increased operating expenses. Yet, increased asset under
management (AUM) was a positive.
Net income attributable to common shareholders stood at $28.0
million compared with $22.6 million in the prior quarter.
Performance in Detail
Total revenue dropped 1% sequentially to $214.2 million,
primarily due to lower private account performance fees, offset
by higher investment management fee revenue. However,
revenues were marginally higher than the Zacks Consensus Estimate
of $214.0 million.
Total operating expenses increased 1% sequentially to $159.5
million. The rise was on the back of higher compensation
expenses, partially offset by a decrease in discretionary
As of Mar 31, 2013, Janus Capital reported AUM of $163.8 billion,
up from $156.8 billion as of Dec 31, 2012. Further, average AUM
increased on a sequential basis to $161.8 billion from $155.6
The increase in company-wide assets during the first quarter 2013
primarily reflects net market appreciation of $11.0 billion
offset by long-term net outflows of $3.9 billion. Fundamental
equity and mathematical equity long-term net outflows totaled
$1.8 billion and $2.4 billion, respectively, while fixed income
long-term net inflows totaled $0.3 billion.
As of Mar 31, 2013, Janus Capital had stockholders' equity of
$1.5 billion, cash and investments of $719.7 million and
outstanding debt of $547.6 million compared with stockholders'
equity of $1.4 billion, cash and investments of $725.6 million
and outstanding debt of $545.1 million in the prior quarter.
Cash flow from operations during the reported quarter was
negative $13.3 million compared with positive $67.4 million in
the prior quarter.
Capital Deployment Activity
During the first quarter of 2013, Janus Capital repurchased
376,349 shares of its common stock at an average price of $9.44
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 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
Shares of Janus Capital currently carry a Zacks Rank #2 (Buy).
Other stocks in the same sector performing well include
Virtus Investment Partners, Inc.
Affiliated Managers Group Inc.
Ameriprise Financial, Inc.
). While Virtus Investment carries a Zacks Rank #1 (Strong Buy),
the other two carry a Zacks Rank #2.