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Janus Capital (JNS) Misses on Q3 Earnings, Revenue Jumps

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Shares of global investment firm Janus Capital Group, Inc.JNS rose 6.52%, despite the company recording a negative earnings surprise of 4.3% in third-quarter 2015. The company reported third-quarter 2015 earnings per share attributable to common shareholders of 22 cents, missing the Zacks Consensus Estimate by a penny. However, results were in line with the prior-year quarter earnings.

Including a loss of 12 cents from the early retirement of debt, earnings came in at $19.9 million or 10 cents per share compared with $40.9 million or 22 cents per share in the prior-year quarter.

On a year-over-year basis, higher revenues and increase in assets under management (AUM) were recorded. However, elevated operating expenses were a concern.

Janus Capital Group Inc. - Earnings Surprise | FindTheBest

Performance in Detail

Total revenue increased 15.5% year over year to $273.8 million in the quarter, primarily due to higher investment management fee revenues, shareowner servicing fees and other and reduced negative performance fees. Moreover, revenues beat the Zacks Consensus Estimate of $270.1 million.

Total operating expenses increased 15.1% on a year-over-year basis to $190.4 million in the quarter. The increase was a result of rise in almost all categories of expenses.

Asset Position

Average AUM increased to $192.1 billion from $176.5 billion in the prior-year quarter and $193 billion in the prior quarter.

As of Sep 30, 2015, Janus Capital reported total AUM of $185 billion, up from $174.4 billion as of Sep 30, 2014 but down from $192.5 billion as of Jun 30, 2015.

Notably, the reported quarter witnessed sequential decrease in complex-wide assets, reflecting net market depreciation of $11 billion, exchange-traded product net outflows of $0.4 billion, money market net inflows of $0.1 billion and long-term net outflows of $3.3 billion. Fundamental equity, Mathematical equity and fixed-income long-term net outflows summed $1.5 billion, $1.6 billion and $0.2 billion during the quarter.

Balance Sheet

As of Sep 30, 2015, Janus Capital had stockholders' equity of $1.7 billion, cash and investments of $649.7 million and outstanding debt of $405.3 million compared with stockholders' equity of $1.6 billion, cash and investments of $654.3 million and outstanding debt of $452 million in the prior quarter.

Cash flow from operations during the reported quarter was $122 million compared with $100.1 million in the prior-year quarter.

Capital Deployment Activity

During third-quarter 2015, Janus Capital repurchased over 1.7 million shares of its common stock at an average price of $15.30 per share and a total cost of $26 million.

Our Viewpoint

Janus Capital has the best-in-class investment boutique with potential for AUM and revenue along with competitive leverage growth. Capital deployment activities of the company are also commendable. Moreover, recent stake acquisition in Kapstream enhances Janus Capital's fixed income assets.

Though, given its healthy balance sheet, we believe Janus Capital has the potential to perform well in the long run, the company's equity-heavy portfolio makes it vulnerable to the equity market. Further, higher expenses remain a concern.

Janus Capital currently carries a Zacks Rank #4 (Sell).

Among other investment managers, Waddell & Reed Financial, Inc. WDR , Invesco Ltd. IVZ and Legg Mason Inc. LM are scheduled to release September quarter-end earnings results on Oct 27, Oct 29 and Oct 30, respectively.

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JANUS CAP GRP (JNS): Free Stock Analysis Report

INVESCO LTD (IVZ): Free Stock Analysis Report

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

LEGG MASON INC (LM): Free Stock Analysis Report

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


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

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