Cohen & Steers (CNS) Q4 Earnings Beat On Higher Revenues

Cohen & Steers’ (NYSE:CNS) fourth-quarter 2019 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Also, the bottom line was 32.1% higher than the year-ago quarter figure.

Results benefited from an improvement in assets under management (AUM) and higher revenues. However, rise in expenses was a headwind.

Net income available to common stockholders (GAAP basis) was $36.7 million or 75 cents per share, up from $25.6 million or 54 cents per share in the prior-year quarter.

For 2019, the company reported adjusted earnings of $2.57 per share, which beat the Zacks Consensus Estimate of $2.50. Also, the bottom line was 7.1% higher than the previous year. Net income available to common stockholders (GAAP basis) for the year was $134.6 million or $2.79 per share, up from $113.9 million or $2.40 per share in 2018.

Revenues Improve, Expenses Rise

Quarterly revenues (GAAP basis) were $109.8 million, up 17% from the year-ago quarter. An increase in all three components of revenues drove the upside.
For 2019, revenues (GAAP basis) were $410.8 million, up 7.8% from 2018.

Total expenses (GAAP basis) amounted to $63.4 million, up 6.4% year over year. The increase resulted from a rise in all cost components.

Operating income (GAAP basis) was $46.5 million, up 35.4% year over year.

Total non-operating income was $1.4 million against non-operating loss of $3.3 million in the year-ago quarter.

AUM Improves

As of Dec 31, 2019, AUM was $72.2 billion, up 24.8% from the year-earlier quarter. The company witnessed net inflows of $1.6 billion in the quarter against outflows of $1.2 billion a year ago.

Also, average AUM totaled $71 billion, up 16.9%.

Our Take

While the company’s diverse product offerings and investment strategies will likely continue to support top-line growth, rising operating expenses (as witnessed in the fourth quarter) are likely to hurt bottom-line growth to an extent in the near term. Moreover, the company's high dependence on advisory revenues is a key near-term concern.

Currently, Cohen & Steers carries a Zacks Rank #4 (Sell).

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

Earnings Release Schedule of Other Investment Managers

Federated Investors, Inc. (NYSE:FII) and Virtus Investment Partners, Inc. (NASDAQ:VRTS) are scheduled to report results on Jan 30 and Jan 31, respectively. Ares Capital Corporation (NASDAQ:ARCC) is scheduled to announce results on Feb 12.

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