On Jun 17, 2013, we reiterated 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 low interest-rate environment remain concerns.
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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-quarter 2013, the company reinvested $77 million in net new
seed capital and returned $4 million of capital 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 2013, the company is focused on delivering
strong long-term investment performance with controlling expenses
and continuing to invest in the business for long-term growth.
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 first-quarter 2013 earnings per share of
15 cents, lagging the Zacks Consensus Estimate by a penny.
Moreover, results compared unfavorably with the prior-year
quarter earnings of 17 cents per share. Lower-than-expected
results were due to declining revenues and increased operating
Following Janus Capital's first-quarter 2013 results, the Zacks
Consensus Estimate for 2013 and 2014 remained stable at 65 cents
and 77 cents per share, over the last 60 days. Hence, the company
carries a Zacks Rank #3 (Hold).
Some Major Companies to Consider
Some better performing investment managers that are worth
Artisan Partners Asset Management Inc.
Noah Holdings Limited
Virtus Investment Partners, Inc.
). All 3 companies carry a Zacks Rank #1 (Strong Buy).