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Victory Capital (VCTR) Q2 Earnings Top Estimates, Revenues Up

Victory Capital Holdings VCTR reported second-quarter 2020 adjusted earnings of 89 cents per share, outpacing the Zacks Consensus Estimate of 83 cents. Also, the reported figure compares favorably with the 38 cents reported in the prior-year quarter.

Results benefited from a rise in assets under management (AUM) and higher revenues. However, elevated expenses were an undermining factor. Additionally, net outflows were a headwind.

Net income attributable to Victory Capital totaled $44.7 million or 61 cents per share compared with the $14.4 million or 20 cents per share witnessed in the prior-year quarter.

Revenues Increase, Expenses Escalate

Total revenues increased significantly year over year to $181.9 million. This upswing can be primarily attributed to higher average AUM. However, the top-line figure missed the Zacks Consensus Estimate of $185 million.

Adjusted earnings before interest, taxes, depreciation and amortization came in at $86.3 million, significantly up from the year-ago quarter’s $36.6 million.

Total operating expenses flared up 69.2% to $116.1 million. Rise in almost all the components, except for acquisition-related costs, resulted in this upsurge.

As of Jun 30, 2020, total AUM was $129.1 billion, up from the $64.1 million recorded in the prior-year quarter. Net outflows of $11.9 billion slightly affected AUM.

Decent Capital & Liquidity Position

As of Jun 30, 2020, Victory Capital had $55.2 million in cash and cash equivalents, up from the $37.1 million reported as on Dec 31, 2019. Notably, the company had $857.2 million of debt, down 7.3% from the Dec 31, 2019 level.

Shareholders’ equity as of Jun 30, 2020, was $614.8 million, up from $537.9 million as of Dec 31, 2019.

Our Take

Victory Capital’s second-quarter results reflect benefits from the acquisition of the USAA Asset Management Company, which closed on Jul 1, 2019. The bank is well -positioned for growth on successful partnerships and global distribution capability, along with a diverse product mix.

Nevertheless, net outflows are a major concern. Also, a persistently rising cost base might hamper bottom-line expansion in the upcoming period.
 

Victory Capital Holdings, Inc. Price, Consensus and EPS Surprise

Victory Capital Holdings, Inc. Price, Consensus and EPS Surprise

Victory Capital Holdings, Inc. price-consensus-eps-surprise-chart | Victory Capital Holdings, Inc. Quote

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Franklin Resources Inc. BEN reported third-quarter fiscal 2020 (ended Jun 30) adjusted earnings of 70 cents per share, comfortably beating the Zacks Consensus Estimate of 53 cents. Results also compared favorably with the earnings of 55 cents per share recorded in the prior-year quarter.

Cohen & Steers’ CNS adjusted earnings of 54 cents per share missed the Zacks Consensus Estimate of 55 cents in the June-end quarter. Moreover, the bottom line came in 12.9% lower than the year-ago reported figure.

Affiliated Managers Group Inc.’s AMG second-quarter economic earnings of $2.74 per share surpassed the Zacks Consensus Estimate of $2.70. Nevertheless, the bottom line declined 17.7% year over year.

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