Waddell & Reed Financial Inc.
) posted third-quarter 2013 earnings per share of 80 cents,
surpassing the Zacks Consensus Estimate of 72 cents. This also
compared favorably with the year-ago earnings of 61 cents.
Robust results were driven by top-line growth, partially offset
by higher operating expenses. Rise in assets under management
(AUM) and a solid balance sheet were the other positives.
Net income for the said quarter came in at $68.4 million, up
31.3% from $52.1 million in the comparable period last year.
Highlights of the Release
Waddell & Reed's operating revenues climbed 18.2% to $347.1
million from $289.7 million in the year-ago quarter. Moreover,
operating revenues exceeded the Zacks Consensus Estimate of
Overall, gross sales increased 24.8% year over year to $6.8
billion. Redemptions were $5.3 billion, up 15.2% from $4.6
billion in the prior-year quarter. Moreover, net inflows rose
78.6% year over year to $1.5 billion.
At the Advisors channel, gross sales rose 17.7% to $1.4 billion
from $1.2 billion in the year-ago quarter. Net inflows grew 41.5%
year over year to $259 million.
At the Wholesale channel, gross sales rose 40.3% to $5.2 billion
from the previous-year quarter. Net inflows increased to $1.6
billion from $670 million in the year-ago quarter.
Gross sales at the Institutional channel came in at $386 million,
decreasing 49.4% from $763 million in the prior-year quarter.
Further, the segment witnessed net outflows of $164 million
versus inflows of $231 million as of Sep 30, 2012.
Waddell & Reed's operating expenses rose 14.2% year over year
to $243.8 million. This was primarily due to increase in
underwriting and distribution expenses, compensation and related
costs as well as general and administrative costs.
Operating margin came in at 29.8%, up from 27.2% in the
As of Sep 30, 2013, AUM totaled $113.7 billion, up 17.1% from
$94.8 billion as of Sep 30, 2012.
As of Sep 30, 2013, cash and cash equivalents as well as
investment securities were $623 million. Moreover, long-term debt
totaled $190 million and stockholders' equity was recorded at
In the reported quarter, Waddell & Reed repurchased 317,000
Performance of Other Financial Organizations:
Ameriprise Financial Inc.
) third-quarter earnings per share surpassed the Zacks Consensus
Estimate. Better-than-expected results were driven by top-line
growth, partially offset by higher operating expense.
Among other financial institutions, quarterly earnings of
The Blackstone Group L.P.
) missed the Zacks Consensus Estimate while
) posted in-line earnings. Blackstone's results suffered due to
fall in the top line, partly offset by lower expenses. On the
other hand, BlackRock's earnings were aided by revenue growth but
partly offset by steep operating expenses.
Waddell & Reed remains an attractive pick for investors,
given its capital deployment activities on the back of a stable
balance sheet position. Moreover, sustainable sales growth across
most of its segments will expectedly drive profitability going
forward. On the flip side, rising expenses, the sluggish economic
scenario and cut-throat competition keep us cautious.
Waddell & Reed at present carries a Zacks Rank #2 (Buy).
AMERIPRISE FINL (AMP): Free Stock Analysis
BLACKROCK INC (BLK): Free Stock Analysis
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WADDELL&REED -A (WDR): Free Stock Analysis
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