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Investment Management Earnings on Oct 26: BEN, IVZ & More

Zacks Equity Research
Updated

The performance of the investment management/brokerage industry (part of the broader Finance sector) has been impressive over the past several quarters. Rising interest rates also continue to benefit the industry. Further, majority of the investment managers have stopped waiving off their fees as interest rates gradually improve. This is likely to aid top-line growth.

Performance of equity markets remained strong in the July-September quarter. The S&P 500 Index gained 4.5% in the quarter and the index measuring international equity performance — the MSCI EAFE — climbed roughly 5%. This resulted in asset inflows and a rise in assets under management (AUM). Thus, the related fees might also witness an increase, thereby supporting revenue growth.

Per the latest Earnings Preview, overall earnings for the investment management/brokerage industry in the quarter are expected to grow 8% year over year. This compares unfavorably with the prior-quarter growth of 8.6%.

Now, let’s take a look at some of the investment management stocks are that scheduled to announce their results tomorrow.

Franklin Resources Inc. BEN is slated to report fourth-quarter and fiscal 2017 results before the opening bell. The company is likely to record a rise in AUM for the to-be-reported quarter. The Zacks Consensus Estimate for total AUM is expected to rise 1.4% year over year to $743 million.

Thus, driven by increase in AUM and higher investment management fees (the Zacks Consensus Estimate is $1.1 billion reflecting a rise of 1% from the prior-year quarter), Franklin’s revenues are likely to rise. The Zacks Consensus Estimate for sales of $1.64 billion indicates a year-over-year increase of 1.6%.

However, the company is expected to show a slight increase in operating expenses as it continues to enhance its technological reach. Overall, earnings are projected to decline year over year. The Zacks Consensus Estimate of 72 cents indicates a 12.2% decline from the year-ago quarter.

(Read more: What's in Store for Franklin Resources in Q4 Earnings?)

Notably, this Zacks Rank #2 (Buy) stock has an impressive earnings surprise history, with an average positive surprise of 10.6% for the trailing four quarters.

Franklin Resources, Inc. Price and EPS Surprise

 

Franklin Resources, Inc. Price and EPS Surprise | Franklin Resources, Inc. Quote

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Invesco Ltd. IVZ is scheduled to release third-quarter 2017 results before the market opens. Driven by favorable market returns and net long-term inflows, the company is expected to record a rise in AUM. Thus, given the improvement in AUM in the quarter, the related fee will likely increase, thereby supporting revenue growth.

Notably, the Zacks Consensus Estimate for sales for the to-be-reported quarter is $1.33 billion, which is projected to witness growth of 10.3%.

Invesco’s expenses in the quarter are likely to witness a marginal increase, mainly due to higher property, office and technology expenses.

Overall, earnings are projected to grow year over year. The Zacks Consensus Estimate of 66 cents indicates 10% rise from the prior-year quarter. The stock has a Zacks Rank #2. (Read more: What's in the Cards for Invesco Stock in Q3 Earnings?)

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

Further, Invesco has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 3.9%.

Invesco PLC Price and EPS Surprise

 

Invesco PLC Price and EPS Surprise | Invesco PLC Quote

Principal Financial Group, Inc. PFG is set to report third-quarter 2017 results after the market closes. The company’s fee-based revenue sources coupled with rise in investment income might drive increased revenues. Also, AUM is expected to improve owing to better performance in asset management and asset accumulation segments.

The Zacks Consensus Estimate for revenues is pegged at $3.12 billion, reflecting a 10.8% year-over-year increase. Also, the Zacks Consensus Estimate for earnings of $1.29 per share shows a 12.4% year-over-year rise. The stock has a Zacks Rank #2. (Read more: Principal Financial Q3 Earnings: Is a Beat in Store?)

Additionally, Principal Financial has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 7.3%.

Principal Financial Group Inc Price and EPS Surprise

 

Principal Financial Group Inc Price and EPS Surprise | Principal Financial Group Inc Quote

T. Rowe Price Group, Inc. TROW is scheduled to report third-quarter 2017 results before the opening bell. The company is likely to record a rise in AUM in the quarter, given the decent performance of equity markets. The Zacks Consensus Estimate for AUM is $911 billion, up 4.6% sequentially.

Further, T. Rowe Price is anticipated to record an increase in revenues. The Zacks Consensus Estimate for sales of $1.22 billion indicates around 11.7% growth from the prior-year quarter.

Nonetheless, owing to several ongoing planned strategic actions, T. Rowe Price is expected to witness higher expenses.  

Overall, the earnings are projected to grow year over year. The Zacks Consensus Estimate of $1.44 reflects 22.7% improvement from the prior-year quarter. The stock sports a Zacks Rank #1. (Read more: T. Rowe Price to Post Q3 Earnings: A Beat in Store?)

However, T. Rowe Price doesn’t have a decent earnings surprise history, with an average negative surprise of 1.2% for the trailing four quarters.

T. Rowe Price Group, Inc. Price and EPS Surprise

 

T. Rowe Price Group, Inc. Price and EPS Surprise | T. Rowe Price Group, Inc. Quote

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T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
 
Invesco PLC (IVZ) : Free Stock Analysis Report
 
Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
 
Principal Financial Group Inc (PFG) : Free Stock Analysis Report
 
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Zacks Investment Research