On Jun 3, 2014, we issued an updated research report on New York based investment management firm Federated Investors, Inc. ( FII ). The company recently reported dismal first-quarter 2014 results. Results were impacted by a decline in the top line. Moreover, the company recorded lower assets under management (AUM) in the quarter. However, decrease in expenses reflected prudent expense management.
Federated posted first-quarter 2014 earnings per share of 34 cents, missing the Zacks Consensus Estimate by 8.11%. Net income came in at $35.2 million, down 18.1%.
Recently, Federated and Huntington Asset Advisors, Inc., a unit of Huntington Bancshares, Inc. ( HBAN ) completed a deal under which, Federated acquired fixed-income assets worth $300 million. Increased assets under management will furnish Federated with various new fund offerings that would benefit its clients.
Federated's efforts in enhancing shareholder value through its efficient capital deployment activities are commendable. Notably, in first-quarter 2014, the company paid $26.2 million as cash dividends while it repurchased 0.3 million shares of common stock for $7.5 million.
Though Federated exhibits decent fundamentals, we remain cautious due to the current economic uncertainty across the industry. These include volatile equity markets, the ongoing fee waiving trend in money market funds to maintain positive or zero net yields and the prevailing stringent regulatory landscape.
Further, the Zacks Consensus Estimate over the past 60 days declined 6.7% to $1.53 per share for 2014. Also, for 2015, it decreased 5.6% to $1.84 per share.
Federated currently carries a Zacks Rank #4 (Sell).
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