Waddell & Reed Rides on Strong Inflows - Analyst Blog


On Jul 8, 2014, we issued an updated research report on Waddell & Reed Financial, Inc. ( WDR ). All the business segments of this Overland Park, KS-based investment manager are performing well, driven by strong inflows. However, rising operating expenses continue to put huge pressure on the company's financials.

The business segments of Waddell & Reed - advisor channel, wholesale channel and institution channel - witnessed better net inflows in first-quarter 2014 compared with the prior-year quarter. The consistently strong investment performance resulted in solid growth trajectory for the company. Notably, further improvement in the equity market is expected to generate more inflows for the company, which will drive profitability in the long run.

Nevertheless, escalating operating expenses remain a serious concern for the company. Steady increase in compensations and related costs is a major reason behind the mounting expenses. Going forward, regulatory changes and steeper compensation costs are likely to push the expense level even further.

Over the past 60 days, the Zacks Consensus Estimate for 2014 remained unchanged at $3.75 per share, while it declined 0.7% to $4.36 per share for 2015.

Waddell & Reed currently carries a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked finance stocks include Fortress Investment Group LLC ( FIG ), Kohlberg Kravis Roberts & Co. ( KKR ) and Lazard Ltd. ( LAZ ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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WADDELL&REED -A (WDR): Free Stock Analysis Report

FORTRESS INVEST (FIG): Free Stock Analysis Report

LAZARD LTD (LAZ): Free Stock Analysis Report

KKR & CO LP (KKR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: WDR , FIG , LAZ , KKR



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